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The numbers: The number of Americans who applied for unemployment benefits in the first week of February fell by 9,000 to 218,000 and indicated that layoffs remain extremely low.

Initial jobless claims declined from a three-month high of 227,000 in the prior week.

Economists polled by The Wall Street Journal had forecast new claims to total 220,000 in the seven days ended Feb. 3.

New jobless claims are starting to become more normal again after the usual fluctuations during the holiday season stretching Thanksgiving until Martin Luther King Jr. Day.

What they show is a hot labor market that has cooled slightly but remains remarkably strong.

Tom Barkin, president of the Richmond Federal Reserve, said what he is hearing from business contacts is “not as much hiring, but not as much firing,” in an interview on Bloomberg News.

Big picture: Business are hiring at a slower pace compared to last year, but they have been reluctant to lay off workers because of a tight labor and steadily growing economy.

The labor market could get a boost later in the year if the Federal Reserve cuts interest rates as widely expected.

What is unclear is whether wages would start to rise faster under that scenario and complicate the Fed’s job to fully tame inflation.

Key details: New jobless claims fell in 42 of the 53 states and territories that report these figures to the federal government.

The number of people collecting unemployment benefits in the U.S., meanwhile, dropped by 23,000 to 1.87 million.

These so-called continuing claims had hit a three-month peak last week and indicate it’s taking longer for people to find new jobs.

Looking at actual or unadjusted figures, initial jobless claims showed a welcome decline and were slightly lower at 232,727 compared to the same week in 2023.

Market reaction: Muted. The Dow Jones Industrial Average
and S&P 500
were set to open slightly lower in Thursday trading.

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