The Federal Reserve’s July 28–29 FOMC minutes showed significant policy divisions amid persistent inflation. The Committee voted 9–3 to keep the federal funds rate at 3.5%–3.75%, with three members dissenting in favor of a 25-basis-point hike. Elevated inflation was driven by tariffs, Middle East energy disruptions, and strong demand from the AI investment boom. While the labor market remained relatively stable, several officials warned that current rates may not be restrictive enough, indicating that further tightening could be necessary if inflation fails to move sustainably toward their 2% target.

The U.S. Department of Labor reported that advance seasonally adjusted initial jobless claims fell by 6,000 to 206,000 for the week ending August 15, down from the prior week’s revised level of 212,000. The four-week moving average rose to 204,000, up 4,250. The advance seasonally adjusted insured unemployment rate for the week ending August 8 held steady at 1.2%, while insured unemployment rose by 18,000 to 1.799 million. On an unadjusted basis, initial claims dropped 17,123 (-9.1%) to 172,080, compared with 194,217 in the same week last year. State-level data showed increases in initial claims in 12 states and territories and declines in 41. For the week ending August 1, total continued claims across all programs fell by 21,302 to 1,839,126, remaining well below the 2,005,772 claims recorded a year ago.

The Federal Reserve Bank of Philadelphia reported that its Manufacturing Business Outlook Survey index rose to 47.4 in August from 41.4 in July, hitting its highest level since April 2021 and signaling continued expansion. The gain came despite some easing in demand, as the new orders index fell to 30.1 from 37.0 and shipments dropped to 27.7 from 33.7, though both remained above long-run nonrecession averages. Labor conditions strengthened as the employment index surged to 27.9 from 10.0, while price pressures eased—the prices paid index fell to 40.9 and prices received dropped to 17.7. Firms grew significantly more optimistic about the six-month outlook, with the future general activity index jumping to 73.6 from 34.4, its highest reading since August 1983.