US jobless claims decline, retail sales surge

Jobless claims: Signs of stability

The Labor Department reported that initial claims for state unemployment benefits fell by 7,000 to a seasonally adjusted 227,000 for the week ending August 10. Economists forecasted 239,000 claims. The four-week moving average of claims, which smooths out volatility, edged lower by 4,500 to 236,500, signaling continued stability in the labor market.

Continuing claims, which run a week behind the headline figure, dropped by 7,000 to 1.864 million. However, the four-week average for continuing claims ticked up by 1,000 to 1.862 million, the highest level since November 2021. The mixed readings suggest that while layoffs remain low, long-term unemployment is seeing a slight uptick.

Retail Sales: Consumers show resilience

In a separate report, the Commerce Department revealed that U.S. retail sales jumped 1.0% month-on-month in July, significantly beating expectations of a 0.3% rise. The robust gain follows a downwardly revised 0.2% decline in June and marks the largest increase since January. The stronger-than-expected sales growth suggests consumers are continuing to spend despite high inflation and rising interest rates.

The retail sales data provide further evidence that the U.S. economy is holding up under the pressure of tighter financial conditions. Analysts attribute the strong performance to sustained wage growth and a healthy labor market, which have helped consumers navigate higher costs.

Fed watch: Bostic hints at rate cut

The economic backdrop comes as the Federal Reserve faces a pivotal decision on whether to begin easing its policy stance. Atlanta Fed President Raphael Bostic, in an interview with the Financial Times, said he is “open” to a rate cut in September, noting that the central bank must be proactive in its policy approach.

“We can’t afford to be late if the data start pointing towards softer conditions,” Bostic said, emphasizing that the Fed remains data-dependent as it assesses incoming reports.

UK GDP: No growth in June, modest Q2 growth

UK GDP data showed no growth in June, in line with expectations. The services sector contracted by 0.1% month-on-month after five months of expansion, while production and construction output rose by 0.8% and 0.5%, respectively.

On a quarterly basis, UK GDP grew 0.6% in the second quarter, matching forecasts. The growth was primarily driven by a 0.8% expansion in services, offset by slight declines in both production and construction output. The figures suggest that while the UK economy continues to expand, underlying momentum remains fragile.