Agencies
New applications for U.S. unemployment aid unexpectedly fell last week, but the number of people collecting benefits in mid-October was the highest in nearly three years, indicating it was becoming harder for those losing jobs to land new positions.
The second straight weekly drop in filings for state unemployment benefits reported by the Labor Department on Thursday likely reflected an ebb in claims from Hurricane Helene, which earlier this month had boosted applications to the highest level in nearly 1-1/2 years. The rise in claims related to Hurricane Milton has been more muted than initially feared.Given the distortions from the hurricanes as well as an ongoing strike by roughly 33,000 workers at Boeing , opens new tab, economists expected Federal Reserve officials to shrug off any sharp slowdown in nonfarm payrolls growth or rise in the unemployment rate when they meet next month.
The employment report for October will be published days before Americans head to the polls on Nov. 5 to elect a new president.”The labor market is softening but not imploding,” said Carl Weinberg, chief economist at High Frequency Economics. "Fed policy is aimed at supporting the economy and the job market before a recession shapes up. Gradual easing to achieve that goal may achieve it.”
Initial claims for state unemployment benefits dropped 15,000 to a seasonally adjusted 227,000 for the week ended Oct. 19, the Labor Department said. Economists polled by Reuters had forecast 242,000 claims for the latest week.Unadjusted claims declined by 22,634 to 202,635 last week. A jump of 4,275 in filings in Florida was more than offset by significant decreases in Georgia, North Carolina, New York and Texas, as well as Tennessee, Ohio and Michigan.
Though the hurricanes and the strike have obscured the labor market view, there does not appear to be a major material shift.
The Fed’s "Beige Book” report on Wednesday described employment as having "increased slightly” in early October, "with more than half of the districts reporting slight or modest growth and the remaining districts reporting little or no change.”It also noted that "many districts reported low worker turnover, and layoffs reportedly remained limited,” adding that "demand for workers eased somewhat, with hiring focused primarily on replacement rather than growth.”
That was reinforced by a survey from S&P Global on Thursday showing a measure of employment in the manufacturing and services sectors holding steady in October. S&P Global said a decline in service jobs was "often linked to the non-replacement of leavers rather than layoffs.”
Historically low layoffs are propping up the labor market and the overall economy even as hiring has tapered off. Economists estimate that the hurricanes could cut as many as 40,000 jobs from October’s nonfarm payrolls count. Estimates for payroll gains are currently in the 100,000 to 125,000 range.
The economy added 254,000 jobs in September. October’s strike report on Friday could shed more light on payrolls for this month. Striking workers are counted as unemployed if they are not paid during the period that includes the 12th of the month, and they are not eligible for jobless benefits.
Boeing’s unionized West Coast workers have been on strike for six weeks, with ripple effects on nonstriking employees and the planemaker’s suppliers. They voted on Wednesday to reject a proposed new contract.
Stocks on Wall Street were mostly lower. The dollar fell against a basket of currencies. U.S. Treasury prices rose.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, rose 28,000 to a seasonally adjusted 1.897 million during the week ending Oct. 12, the highest level since mid-November in 2021, the claims report showed. The jump in the so-called continuing claims reflected the fallout from the strike, Hurricane Helene as well as permanent job losses related to layoffs by Chrysler parent Stellantis.
Continuing claims covered the period during which the government surveyed households for October’s unemployment rate. Continuing claims increased between the September and October survey weeks, raising the risk of an uptick in the jobless rate from 4.1% in September.