US jobless claims rise but labour market remains stable; existing home sales at 16-year low
US initial jobless claims rose to 200,000 in early November, above forecasts but still consistent with a stable labour market. Existing home sales fell to 3.75 million annualised units in October, the lowest since 2010, as elevated mortgage rates and the Middle East conflict weighed on housing deman
The number of Americans filing new claims for unemployment benefits increased more than expected last week, but remained at a level consistent with a stable labour market, allowing the Federal Reserve to focus on fighting inflation, according to data released on 12 November.
Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 200,000 for the week ended 7 November, the Labour Department said. Economists polled by Reuters had forecast 195,000 claims. Claims have stayed at or below 200,000 since mid-September and remain close to the 189,000 level touched in mid-July, the lowest since 1969.
Economists expect layoffs to remain low through the end of the year, though seasonal volatility related to the holiday season could cause some spikes. The government last week reported a surge in nonfarm payrolls in October and a decline in the unemployment rate to 4.1 per cent from 4.2 per cent in September. “Firms are continuing to hold on to labour,” said Olivia Cross, senior US economist at Pantheon Macroeconomics. “We expect layoffs to remain low through the fourth quarter, but then come under some pressure next year in response to the recent tightening of financial conditions and the growing use of AI by firms.”
Some economists argue that a smaller workforce, due to retirements and the Trump administration's immigration crackdown, is the key driver of the historically low level of claims. “A generally smaller labour force could mean fewer workers to file for unemployment insurance,” said Veronica Clark, an economist at Citigroup. “Of course, this would still be consistent with a low unemployment rate, with continuing claims suggesting the unemployment rate may even fall further towards around 4.0 per cent in data by early 2027.”
US central bank Governor Michael Barr warned on Thursday the nation should be prepared for “serious short-term disruptions” to the job market because of AI, which he said could begin displacing workers at scale and widening inequality in favour of investors.
In a separate report, the National Association of Realtors said sales of previously owned homes tumbled 5.5 per cent in October to a seasonally adjusted annual rate of 3.75 million units, the lowest level since August 2010. Economists had forecast home resales falling to a rate of 3.85 million units. The drop in sales was across all price categories, including those priced US$1 million and above. The 30-year fixed mortgage rate jumped above 7 per cent in late August, rising to 7.40 per cent by mid-September, for a total of 142 basis points since the US and Israel attacked Iran at the end of February, data from mortgage finance agency Freddie Mac showed.
“Home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023,” said Lawrence Yun, the NAR's chief economist. The median existing home price last month advanced 0.4 per cent from a year ago to US$421,900, the highest for any October. “With mortgage rates expected to remain above 7 per cent through most of 2027, we expect home sales to remain below 4 million until late next year,” said Nancy Vanden Houten, lead US economist at Oxford Economics.