| Key Points: – Weekly jobless claims dropped to 227,000, the lowest in nearly a month, beating economist expectations. – Continuing claims rose slightly to 1.89 million, the highest since November 2021. – The labor market remains stable, with layoffs staying limited despite economic uncertainties and recent weather disruptions. |
Weekly jobless claims in the U.S. unexpectedly fell last week, indicating a resilient labor market despite economic uncertainties and recent disruptions. The latest data from the Department of Labor showed that 227,000 initial jobless claims were filed in the week ending October 19, a notable decrease from 241,000 the week prior. This was below the 242,000 claims economists had expected, according to Bloomberg data.
This reversal marks a break in the upward trend that began in September, which had pushed jobless claims to their highest levels in over a year. While jobless claims provide an indication of layoffs and labor market churn, the continued decline shows that turnover remains low, and layoffs are not spiking despite broader concerns about the economy.
In addition to initial claims, continuing claims, which measure the number of people still receiving unemployment benefits, rose slightly to 1.89 million for the week ending October 12. This is up from 1.86 million the previous week and marks the highest level since November 2021.
Economists believe the recent drop in jobless claims reflects a recovery from weather-related disruptions, particularly hurricanes in the southern U.S. “Claims in some states affected by Hurricane Helene retreated from recent highs, though claims in Florida rose, likely due to Hurricane Milton,” noted Oxford Economics senior economist Nancy Vanden Houten. With jobless claims now back to pre-hurricane levels, the data suggests the labor market remains steady, with few layoffs across the board.
Experts have pointed out that, despite fluctuations in the data, the job market continues to show resilience in the face of ongoing challenges. The Federal Reserve’s October Beige Book report, which surveys firms across the central bank’s 12 districts, revealed that worker turnover is low and layoffs have remained limited. This finding mirrors other reports that show hiring and quit rates have fallen this year but layoffs have not reached alarming levels.
In fact, many companies are focusing more on replacing workers than expanding their workforce, demonstrating cautious optimism. “The job market continues to shrug off prevailing worries and uncertainties,” noted Oren Klachkin, economist at Nationwide Financial Markets. While employers may be cautious about future economic conditions, they remain hesitant to let go of workers in large numbers.
The steady drop in jobless claims aligns with other indicators that suggest the labor market is cooling but remains robust. Unemployment rates have stayed low, and next week’s data on job openings, quits, and the hiring rate will provide more insight into the state of the labor market.
This labor data comes ahead of a key Federal Reserve meeting in November. Traders are currently pricing in a 95% chance of the Federal Reserve cutting interest rates by 25 basis points. The outcome of this meeting could heavily depend on next week’s data releases and the October jobs report, which is expected to show the U.S. economy adding 135,000 jobs in October, down from 254,000 in September. The unemployment rate is expected to remain steady.
Overall, while labor market growth may be slowing, the low turnover and limited layoffs provide a solid foundation as the U.S. economy navigates uncertainties.