Applications for US jobless benefits rise but remain in healthy range
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The number of Americans seeking jobless benefits rose modestly last week, suggesting that employers are still retaining workers even as the economyhas shown signs of slowing.
Applications for unemployment benefits for the week ending Aug. 30 rose by 8,000 to 237,000, the Labor Department reported Thursday. That’s more than the 231,000 new applications economists were expecting.
Weekly applications for jobless benefits are seen as a proxy for layoffs and have mostly settled in a historically healthy range between 200,000 and 250,000 since the U.S. began to emerge from the COVID-19 pandemic nearly four years ago.
While layoffs are low, hiring has also weakened as part of what many economists describe as a “no hire, no fire” economy. Still, the unemployment rate remains a historically low 4.2%.
On Wednesday, the government reported that U.S. employers were advertising 7.2 million job openings at the end of July, fewer than economists had forecast, and the latest sign of weakness in the U.S. labor market.
The government issues its August jobs report on Friday, with economists expecting that U.S. employers added a slim 80,000 private non-farm jobs.
New job numbers are being closely watched on Wall Street and by the Federal Reserve as the most recent government data suggests hiring has slowed sharply since this spring. Job gains have averaged just 35,000 a month in the three months ending in July, barely one-quarter what they were a year ago.
Growth has weakened so far this year as many companies have pulled back on expansion projects amid the uncertainty surrounding the impacts of President Donald Trump’s tariff policies. Growth slowed to a 1.3% annual rate in the first half of the year, down from 2.5% in 2024.
The sluggishness in the job market is a key reason that Federal Reserve Chair Jerome Powell signaled last week that the central bank may cut its key interest rate at its next meeting, Sept. 16-17. A cut could reduce other borrowing costs in the economy, including mortgages, auto loans, and business loans.
The Labor Department's report Thursday showed that the four-week average of claims, which softens some of the week-to-week volatility, rose by 2,500 to 231,000.
The total number of Americans collecting unemployment benefits for the previous week of Aug. 23 fell by 4,000 to 1.94 million.
General Motors (GM.N), opens new tab, is cutting output at one of its main electric-vehicle factories, the latest automaker to pull back on EVs as U.S. President Donald Trump's administration yanks federal support for green cars.
GM will stop production of two electric Cadillac SUVs at its assembly plant in Spring Hill, Tennessee, during December, according to a person familiar with the matter and communications to GM employees viewed by Reuters.
The plant produces the midsize Cadillac Lyriq - a relative hit and one of GM's top-selling EVs - and the Vistiq, a larger electric SUV.
GM also plans to significantly curtail production of those vehicles during the first five months of next year by temporarily laying off one of its two shifts of workers, according to the sources. The company will additionally shutter the plants for one week in October and November.
The automaker is also planning to indefinitely delay the start of a second shift at an assembly plant near Kansas City, which is still slated to begin production of the Chevy Bolt EV later this year, the person familiar with the matter said.
Asked for comment, the company told Reuters: "General Motors is making strategic production adjustments in alignment with expected slower EV industry growth and customer demand by leveraging our flexible ICE (internal combustion engine) and EV manufacturing footprint."
The Trump administration's tax and spending law, passed in Jul,y withdrew key support for EVs, including a $7,500 consumer tax credit that had been in place for about 15 years. Car executives have said they expect a rough patch for EV sales after that subsidy expires Sept. 30.
"The $7,500 tax credit is driving demand; without that, that'll slow," GM CEO Mary Barra said at an event in December 2024.
The legislation also froze penalties that automakers have long paid if the vehicles they sell fall short of federal standards for fuel efficiency. That is expected to entice car companies to build more gas-powered cars at the expense of electrics, analysts say.
EV sales have failed to meet bullish forecasts carmakers put forth just a few years ago, and most companies continue to lose money on them. Green-car backers say federal support is needed to broaden adoption and prevent the U.S. from falling further behind China -- the world's EV leader -- and Europe.
After struggling with manufacturing problems earlier in the decade, GM's EV sales have surged over the past year. The company said August was its best month ever for EVs, with 21,000 battery-powered vehicles sold across its brands.
Still, executives have stressed GM's gasoline-powered production base as a key strength to navigating the coming years.
"As we adjust to the new EV market realities, the strength of our ICE portfolio will continue to separate our brands from the pack and give us flexibility and profitability that EV-only companies lack," GM's head of North America, Duncan Aldred, wrote in a release earlier this week.
U.S. services sector activity picked up in August, but employment remained subdued as labor market conditions eased.
The Institute for Supply Management (ISM) said on Thursday its non-manufacturing purchasing managers index (PMI) increased to 52.0 last month from 50.1 in July. Economists polled by Reuters had forecast the services PMI rising to 51.0.
A PMI reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of the economy.
Economists have blamed President Donald Trump's punitive tariffs for eroding a once-resilient labor market.
The import duties, which have boosted the nation's average tariff rate to a level not seen since 1934, have stoked fears of inflation, prompting the Federal Reserve to pause its interest rate cutting cycle.
The ISM's measure of services employment was little changed at 46.5 in August, making the third straight month of contraction. Though this measure and the ISM's manufacturing employment gauge have not been good predictors of nonfarm payrolls in the government's closely watched employment report, they aligned with other labor market indicators that have suggested a considerable loss of momentum.
The government reported on Wednesday that there were more unemployed people than open positions in July for the first time since the COVID-19 pandemic.
A Reuters survey of economists expects the employment report on Friday will likely show nonfarm payrolls increased by 75,000 jobs in August after rising by 73,000 in July.
Employment gains averaged 35,000 jobs per month over the last three months compared to 123,000 during the same period in 2024, the government reported in August. The unemployment rate is forecast to climb to 4.3% from 4.2% in July.
Fed Chair Jerome Powell last month signaled a possible rate cut at the U.S. central bank's September 16-17 policy meeting, acknowledging the rising labor market risks, but also added that inflation remained a threat. The Fed has kept its benchmark overnight interest rate in the 4.25%-4.50% range since December.
The ISM survey's new orders measure rose to 56.0 last month from 50.3 in July. With demand picking up, inflation remained elevated. Its measure of prices paid dipped to 69.2 from 69.9 in July, which was the highest level since October 2022. Services inflation has warmed up in recent months, raising concerns that a broad increase in inflation was imminent.
Spirit Airlines, fighting for survival and facing the hard decisions it avoided last November in its first bankruptcy, is cutting 12 cities (including Macon, Ga., which it hasn't had a chance to start yet. Meanwhile, rival airlines that have been waiting in the wings are adding flights. United just announced a host of new routes in the summer schedule, spanning Chicago to Los Angeles to Fort Lauderdale to San Pedro Sula, to win over Spirit customers. In United fashion, execs aren't mincing words. "If Spirit suddenly goes out of business, it will be incredibly disruptive, so we’re adding these flights to give their customers other options if they want or need them," said Patrick Quayle, United's svp of network and alliances. United's CEO Scott Kirby has long been skeptical of the ultra-low cost model, saying that the endless growth they needed to survive can't continue forever (it hasn't). High costs have come to bite the whole industry, but nowhere more than airlines focused on the oversupplied domestic market that relied on low fares and fees for years. But United isn't the only airline chasing Spirit's customers. Rival Frontier Airlines, which tried several times over the last 3 years to combine with Spirit, last week unveiled 20 new routes to compete as Spirit struggles.
🚖 TESLA LAUNCHES ROBOTAXI APP: A NEW ERA IN AUTONOMOUS RIDE-HAILING Tesla has officially launched its Robotaxi app, marking a major step toward the widespread adoption of autonomous transportation. Currently, the service operates in Austin, Texas, offering fully autonomous rides in Tesla Model Y vehicles. Key Features: • User-Friendly Interface: The Robotaxi app integrates seamlessly with Tesla’s existing mobile platform, providing an intuitive experience for users. • Flat-Fare Pricing: Rides are available at a flat rate of $4.20, with no tipping required, simplifying the payment process. • Personalized Ride Experience: Passengers can customize cabin temperature and receive real-time updates on vehicle arrival times. • Smart Destination Suggestions: The app recommends nearby points of interest such as restaurants, cafes, and shopping areas to enhance the ride experience. • Cybercab Theme: The app features a futuristic Cybercab-inspired design, reflecting Tesla’s vision for autonomous mobility. Operational Details: • Limited Fleet: Currently, the service operates with 10–20 vehicles within a geofenced area of Austin. • Safety Measures: Each vehicle is monitored by a trained human safety operator to ensure passenger security. • Service Hours: Robotaxi rides are available daily from 6:00 AM to 12:00 AM, excluding airport zones. Future Plans: Tesla intends to expand the Robotaxi service to additional cities and increase fleet size in the coming months. The company envisions a future where autonomous vehicles reduce traffic congestion, lower emissions, and provide a convenient alternative to traditional transportation. For more information or to join the waitlist, visit Tesla’s official Robotaxi page.
