The number of Americans filing new applications for unemployment benefits fell more than expected last week, easing fears of an unraveling labor market that had sent markets into a tailspin.

Jobless claims dipped by 17,000 to a seasonally adjusted 233,000 for the week ended Aug. 3, the Labor Department said Thursday, the largest drop in about 11 months.

Economists polled by Reuters had forecast 240,000 claims for the latest week.

The latest jobless claim figures are considered a positive sign following Friday’s weak jobs report that showed hiring slowing down considerably last month — sparking calls for the Federal Reserve to cut rates before its next scheduled meeting in September.

Futures for all three major indexes were in the green before Thursday’s opening bell.

Claims over the past few weeks have been hovering near the high end of the range this year, but layoffs remain generally low. 

Government data last week showed the layoffs rate in June was the lowest in more than two years. The slowdown in the labor market is being driven by less aggressive hiring as the Fed’s interest rate hikes in 2022 and 2023 dampen demand.

Until now, strong consumer demand and a resilient labor market have helped to avert a recession that many economists forecast during the extended flurry of rate hikes by the Federal Reserve that began in March 2022.

As inflation continues to ease, the Fed’s goal of a soft landing — bringing down inflation without causing a recession and mass layoffs — appeared to be within reach.

Last Wednesday, the Fed left its benchmark rate alone, but officials hinted strongly that a cut could come in September if the data remained on their recent trajectory.

Interest rate futures contracts currently reflect a roughly 70% probability the Fed will start cutting borrowing costs next month with a bigger-than-usual 50-basis-point reduction.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 6,000 to a seasonally adjusted 1.875 million during the week ending July 27, the claims report showed.

The four-week average of claims, which smooths out some of the weekly ups and downs, rose by 2,500 to 238,000.

There have been job cuts across a range of sectors this year, from the agricultural manufacturer Deere, to media outlets like CNN, and elsewhere.

With Post wires