23/10/2026 03:31 AST
The number of Americans filing new claims for unemployment benefits dropped to near 57-year lows last week amid low layoffs, suggesting job growth picked up in October after September's underwhelming performance. The weekly jobless claims report from the Labor Department on Thursday, the most timely data on the economy's health, continued to show no material stress in the labor market from the oil price shock stemming from the US-Israeli war with Iran.
Economists say strong growth in profits amid robust domestic demand, and a smaller workforce against the backdrop of retirements and an immigration crackdown by the Trump administration, were shielding workers from layoffs. There are, however, worries that tightening financial conditions and higher interest rates because of the drawn-out Middle East conflict could undercut the labor market next year. Initial claims for state unemployment benefits fell 6,000 to a seasonally adjusted 194,000 for the week ended October 17. Economists polled by Reuters had forecast 200,000 claims for the latest week. It was the sixth consecutive week that claims remained at or below the 200,000 mark. Claims are within striking distance of the 189,000 level touched in mid-July, which was the lowest reading since 1969.
The four-week moving average of claims, seen as a better measure of labor market trends as it irons out week-to-week volatility, dropped 1,000 to a record low 197,750.
The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls component of October's employment report. The four-week average of claims fell between the September and October survey weeks, suggesting a pickup in payrolls this month.
Payrolls increased by 29,000 jobs in September after rebounding by 133,000 in August. Payrolls tend to underperform when Labor Day falls relatively late in the month as was the case in September. Economists continue to view the labor market as still in a "low-hire, low-fire" state. But uncertainty from the war and tariffs on imports has stymied hiring. Financial markets were little moved by the claims data.
The claims report showed the number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, increased 25,000 to a still-low seasonally adjusted 1.728 million during the week ended October 10. The so-called continuing claims, however, do not include recent college graduates and others who are ineligible for benefits due to little or no work history.
Some long-term unemployed people may have exhausted their eligibility, which is limited to 26 weeks in most states, keeping continuing claims at low levels. The median duration of unemployment was 11.5 weeks in September, near a 4-1/2-year high. Still, with the unemployment rate at 4.2% in September, the labor market is not a source of inflation. Economists said that reduced the need for the Federal Reserve to aggressively tighten monetary policy as it battles the inflation fallout from the Middle East conflict. The US central bank in September raised its overnight benchmark interest rate by 25 basis points to the 3.75 percent-4.00 percent range.
Economists expect the Fed to stay pat at its meeting next week and hike borrowing costs again in December. "The Fed has a free hand to hike rates next week if it deems monetary tightening necessary to soften demand and increase slack to ensure a return to the inflation target," said Carl Weinberg, chief economist at High Frequency Economics. "Its employment mandate is clearly satisfied."
Reuters
Please wait...