US Federal Reserve Chair Jerome Powell pointed to growing concerns about the labour market as why officials lowered borrowing costs for the first time this year.

Initial applications for jobless benefits in the US fell to the lowest since mid-July, underscoring how companies remain reticent to lay off workers.

New claims decreased by 14,000 to 218,000 in the week ended Sept. 20, according to Labour Department data released Thursday. That was much lower than the median forecast in a Bloomberg survey of economists, which called for 233,000 applications.

The decline in initial claims points to a labor market that — while cooling — has seen relatively limited layoffs. Most companies are choosing to hold onto workers even as lingering economic uncertainty keeps a lid on hiring.

“Claims continue to run at a rate that is way too low to signal a recession,” said Carl B Weinberg, chief economist at High Frequency Economics, in a note. “Today’s report refutes any theories that layoffs have suddenly taken off.”

Separate data Thursday showed that the economy rose in the second quarter at the fastest pace in nearly two years after the government revised up its previous estimate of consumer spending.

The four-week moving average of initial claims, a gauge that helps smooth out volatility, also fell, to 237,500. Meanwhile, continuing claims, a proxy for the number of people receiving benefits, were little changed at 1.93 million after the previous week’s data was revised up.

Before adjusting for seasonal factors, initial claims dropped last week. Texas accounted for nearly half of the decline. Applications there had surged early September, which a state official said was due to increase in fraudulent claim attempts. Even after last week’s decline, claims remain higher than in August.

US Federal Reserve Chair Jerome Powell pointed to growing concerns about the labour market as why officials lowered borrowing costs for the first time this year. He said it can no longer be described as “very solid” and pointed to the slowdown in both the supply and demand of workers.

“In this less dynamic and somewhat softer labour market, the downside risks to employment have risen,” Powell said Tuesday.

See Also: