It's Thursday ¯\_(ツ)_/¯

Short version, initial unemployment claims fell, which was a better than expected result, but a Challenger, Gray, and Christmas report shows a surge in layoffs.

The number of Americans filing new applications for jobless benefits declined last week as layoffs remained low, helping to allay fears that the labor market was deteriorating.

The weekly jobless claims report from the Labor Department on Thursday, the most timely data on the economy's health, also showed unemployment rolls shrinking to levels last seen in mid-June. It reduces the urgency for the Federal Reserve to deliver a 50 basis points interest rate cut this month.

Economists shrugged off other data showing private employers hired the smallest number of workers in August. Most expect the U.S. central bank to kick off its easing cycle with a quarter-point rate reduction as domestic demand remains solid. A step-down in hiring, which pushed the unemployment rate to near a three-year high of 4.3% in July rattled investors and fanned concerns that a recession was stalking the economy.

"There are signs of a slowdown in hiring with fewer job openings, but until payroll jobs actually decline there is no recession," said Christopher Rupkey, chief economist at FWDBONDS. "At the moment, it does not look like the Fed is behind the curve."

Initial claims for state unemployment benefits dropped by 5,000 to a seasonally adjusted 227,000 for the week ended Aug. 31, the lowest level since early July. Economists polled by Reuters had forecast 230,000 claims for the latest week.

Continuing claims fell by 2,000 to 1.838 million the best number since the start of Summer.

That all looks good, but as I noted above, layoffs rose a lot in August:

U.S. employers in August unveiled the greatest number of layoffs in five months, led by cuts in the technology sector, amid a cloudy outlook for growth and ongoing cost concerns, a monthly tally of workforce reduction announcements showed on Thursday.

Firms announced 75,891 layoffs last month, roughly triple the number in July and the largest month-to-month increase in a year, outplacement firm Challenger, Gray and Christmas said. Still, announced staff reductions are down 3.7% year to date.

"August's surge in job cuts reflects growing economic uncertainty and shifting market dynamics. Companies are facing a variety of pressures, from rising operational costs to concerns about a potential economic slowdown, leading them to make tough decisions about workforce management," Challenger Vice President Andrew Challenger said in a statement.

My take is that the official numbers, which come out tomorrow, for the non farm payroll will be rather grim.

It appears to be a lock that the Fed will lower interest rates at its next meeting, but I am still predicting a 25 basis point (¼%) cut, not a 50 basis point cut.