Last updated: October 19, 2023 at 9:14 a.m. ET
First published: October 19, 2023 at 8:36 a.m. ET
The numbers: The number of Americans filing for unemployment benefits last week fell to a nine-month low of 198,000, defying expectations that layoffs would increase as higher U.S. interest rates weighed on the economy.
According to government data, new jobless claims fell from a revised 211,000 the previous week.
New…
The numbers: The number of Americans applying for unemployment benefits last week fell to a nine-month low of 198,000, defying expectations that layoffs would increase as higher U.S. interest rates weighed on the economy.
According to government data, new jobless claims fell from a revised 211,000 the previous week.
The number of new applications for unemployment benefits fell below the 200,000 mark for the first time since mid-January.
The claims indicate a very small number of job losses and indicate a stable economy. When a recession approaches, jobless claims typically top 300,000 — and eventually rise much higher.
Economists had forecast a total of 210,000 new applications for the week ending October 14th.
Important details: New jobless claims fell in 45 of the 53 states and territories that report these numbers to the federal government. Claims increased in only eight states.
The number of raw and actual claims – i.e. before seasonal adjustments – reached a low of 181,181. This is one of the lowest values in more than 50 years.
Meanwhile, the number of people receiving unemployment benefits in the US rose by 29,000 to 1.73 million. However, most of the laid-off workers appeared to find new jobs quickly.
Big picture: The economy is still growing and companies’ demand for their goods and services is high. That’s why companies don’t lay off many workers.
Nevertheless, the labor market appears to be cooling down.
Among other things, hiring has slowed and wages are rising more slowly. And a new Federal Reserve survey found that workers are not changing jobs as often or insisting as strongly on significant pay increases.
Still, a robust labor market could put more pressure on the Fed to keep interest rates high unless wage growth continues to weaken, helping the central bank keep inflation under control:
Looking ahead: “Initial jobless claims fell to their lowest level since January last week, a reminder – should we need one – that layoffs remain very low,” said top U.S. economist Nancy Vanden Houten of Oxford Economics.
“The Fed needs to see further weakening in labor market conditions to be convinced that inflation is on a sustainable path back to 2% before it begins cutting rates.”
Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX are expected to open lower in Thursday trading. The yield on the 10-year US Treasury note rose slightly to 4.96%.