Initial jobless claims fell more than forecast, easing some fears about the US labor market.

Initial filings for unemployment insurance fell more than expected last week, providing some relief to markets worried about signs of a further slowdown in the U.S. labor market and the broader economy.

New data from Department of Labor It showed 233,000 initial jobless claims were filed in the week ended Aug. 3, down from 250,000 the previous week and 240,000 less than economists had expected. In the week ending July 27, jobless claims hit their highest level since August 2023.

Meanwhile, the number of ongoing applications for unemployment benefits reached its highest level since November 2021, with 1.875 million claims filed in the week ended July 27, up 6,000 from the previous week.

“This morning’s report suggests that this may be a normalization [labor market] conditions, as opposed to a sign of apparent weakness lurking around the corner,” Lindsay Bixa, chief economist at Stifel, told Yahoo Finance.

The weak July jobs report was the first fresh reading from the labor market after fueling recession fears a week earlier. The report showed the US economy posted its second-lowest monthly job additions since 2020, while the unemployment rate rose to 4.3%, the highest level in nearly three years.

Piegza noted that Thursday’s report will offset some of the “rising concerns” about the labor market seen in recent trading days.

July’s jobs report sent stocks tumbling as investors quickly priced in higher odds of the Federal Reserve having to cut interest rates more sharply this year to avoid a recession. But many economists have indicated that more data than the July jobs report will be needed to determine how quickly the U.S. labor market is cooling.

“You don’t want to overreact to one data point,” Deutsche Bank senior U.S. economist Brett Ryan told Yahoo Finance. “So without question, the risks are elevated and are leaning toward the Fed starting with more aggressive rate cuts, but we’re not there yet.”