US jobless claims near 57-year low for fourth week despite tepid hiring
US weekly jobless claims slipped to 197,000, holding near 57-year lows for a fourth straight week. Economists describe a 'low-hire, low-fire' market, with layoffs minimal but hiring weak, complicating job searches. Fed officials view the labor market as stable, with a rate hike expected in December.
The number of Americans filing new claims for unemployment benefits fell last week, pointing to continued labor market stability despite a sharp slowdown in job growth in September. Weekly jobless claims have remained near 57-year lows for four straight weeks, the Labor Department reported on Thursday, amid historically low layoffs.
Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 197,000 for the week ended October 3, the Labor Department said. Economists polled by Reuters had forecast 200,000 claims. Claims have held below the 200,000 mark since the second week of September. California and Illinois were the only states to report an increase in unadjusted applications in excess of 1,000.
The four-week moving average of claims, viewed as a better gauge of labor market trends as it irons out week-to-week volatility, fell 2,500 to 198,000 last week, the lowest level since early October 2022.
Although employers are hoarding workers amid strong profit growth and stock market performance, they have remained hesitant to add to headcount, making it harder for those who lose their jobs to find new opportunities. Economists have blamed that trend on uncertainty, first from tariffs and then the US-Israeli war with Iran, which has pushed up diesel prices to record highs and boosted prices for other commodities.
"It's still a 'low-hire, low-fire' job market," said Heather Long, chief economist at Navy Federal Credit Union. "That's great for anyone who has a job and wants to keep it, but it's tough for job seekers."
Nonfarm payrolls increased by a paltry 29,000 jobs in September, the government reported last week. Economists say tepid hiring and a shrinking labor pool amid retirements and an immigration crackdown are holding back job growth, leaving low layoffs to anchor the labor market.
Minutes of the Federal Reserve's September 15-16 policy meeting, published on Wednesday, showed officials "judged that labor market conditions were stable and generally viewed the labor market as close to maximum employment." The minutes also noted that policymakers "generally viewed the upside and downside risks to the labor market as broadly balanced." The US central bank last month raised its overnight benchmark interest rate by 25 basis points to the 3.75 per cent-4.00 per cent range, the first hike in three years, and flagged further increases in borrowing costs ahead. The odds of another rate hike this month were diminished by the underwhelming payroll gains in September as well as cooler-than-expected inflation readings for July and August. Economists expect the Fed to raise rates in December.
The claims report showed the number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, increased 17,000 to a seasonally adjusted 1.716 million during the week ended September 26. The so-called continued claims had dropped to a 3-1/2-year low in the prior week. Some economists argued that the still-low level of continued claims was masking a gradual labor market weakening as a group of unemployed people, including recent college graduates, was ineligible for benefits because of limited or no work history. Some long-term unemployed people may have exhausted their eligibility, which is limited to 26 weeks in most states. The median duration of unemployment was 11.5 weeks in September, near a 4-1/2-year high. The unemployment rate was at 4.2 per cent last month.
"An ongoing rise in unemployment among new entrants and re-entrants to the labor market, amid weak hiring, will put some further gentle upward pressure on the unemployment rate over the next few quarters," said Samuel Tombs, chief US economist at Pantheon Macroeconomics.