“Initial jobless claims moving lower for the fourth consecutive week points to a labor market that continues to be tight and is consistent with the solid job growth recorded in August continuing in September,” Citi’s chief U.S. economist Andrew Hollenhorst wrote in a Thursday note. 

Although the U.S. economy added 187,000 jobs in August, the unemployment rate actually rose to 3.8%, worrying some economists. But Hollenhorst explained that the latest, better-than-expected initial jobless claims data confirms that the unemployment rate rose last month due to an increase in the labor force participation rate (or the number of workers looking for jobs) rather than an increase in layoffs, as Fortune previously reported.

The Department of Labor also revealed Thursday that continuing claims, a measure of the number of Americans receiving unemployment benefits, fell 40,000 in the week that ended August 26 to 1.68 million, their lowest level since late January. 

Continuing claims tend to be a better indicator of “the fundamentals of the labor market” than more volatile initial claims, Jefferies senior economist Thomas Simons explained in a Thursday note. And what he’s seeing in the data is better than expected.

“Workers who are laid off seem to be finding new work with relative ease, or realized layoff activity is far less than what is announced by large businesses,” he said. 

Simons, like many of his peers, has been forced to revise the timing of his recession forecast in 2023. He argued in August that a U.S. recession will now begin in the fourth quarter of 2024, instead of the current quarter, but the latest labor market data even has him considering a soft landing scenario in which there’s no recession. “The chances of a soft landing in the labor market seem to be increasing somewhat, but there is going to be an ebb and flow on this expectation,” he wrote Thursday.

For Chris Zaccarelli, chief investment officer at the financial advisory firm Independent Advisor Alliance, the latest initial claims data is evidence that “the much-forecasted, consensus call of a recession in 2023 is looking less and less likely.”

After a brutal year in 2022, during which the S&P 500 dropped 20%, stocks have recovered this year despite the Federal Reserve hiking interest rates. Zaccarelli argues that the bullish recovery is evidence that investors are recognizing that a recession may not be coming this year after all.

“As it turns out, the death of this economy was greatly exaggerated and a recovery in stock prices this year is merely reflecting a realization that the recession isn’t likely to impact us in 2023,” he wrote.

BMO Wealth Management’s chief investment officer Yung-Yu Ma also said Thursday that the economy currently has a “healthy level of job creation” and that current inflation of 3.2% is a “modest level,” reinforcing his view that a soft landing is on the way.

“We’ve been talking for quite some time about the prospects for a soft landing looking pretty good. Even during a lot of gloom and doom in the marketplace, we felt that the underlying stability looked healthy still. And right now we still think that’s generally the case,” he said.

Pushing back the recession—again?

In spite of the strength in the labor market, many economists still believe rising interest rates will spark a mild recession. It’s the timing of the bearish scenario they’re reconsidering.

“We remain of the opinion that the labor market is becoming increasingly vulnerable, but the turning point now looks to be further out on the horizon, likely at the end of this year or early 2024,” Jefferies’ Simons wrote Thursday. “Businesses will struggle to pass on further price increases to an increasingly strained consumer, and margins will fall as inflation slows, leading to layoffs eventually.”

Simons ultimately believes a mild recession will hit in 2024, but he said that “as with every other element of the economic outlook, it is taking longer to play out than expected.”

The economist explained that businesses have been unwilling to let go of workers after facing consistent labor shortages during the pandemic, which has helped keep the unemployment rate low, but that may not last. “We doubt that they will be able to hold on to everyone indefinitely, but they’re going to try,” he wrote.

Raymond James’ chief economist Eugenio Aleman also still believes a recession is coming. Like Simons, the veteran market watcher revised the timing of his bearish forecast recently, arguing that the U.S. won’t fall into recession until the first quarter of 2024, rather than the fourth quarter of 2023.

Aleman said Thursday that he continues to expect “jobless claims to increase in the future as the economy slows,” but admitted that recent initial claims data “continues to show little evidence of weakening in the labor market yet.”