THE number of Americans filing new claims for unemployment benefits rose moderately last week, while layoffs declined in September, pointing to still-tight labour market conditions at the end of the third quarter.

The economy’s prospects during the last quarter were bolstered by other data on Thursday (Oct 5) showing the trade deficit shrinking to its narrowest in nearly three years in August, with exports of capital goods hitting a record high. The economy has so far weathered hefty interest rate increases from the Federal Reserve to cool demand. That resilience raises the risk of the US central bank hiking rates again by year end.

“Demand in the economy continues to strengthen which can only serve to worry Fed officials even more, and puts the progress in bringing inflation down in jeopardy,” said Christopher Rupkey, chief economist at FWDBONDS in New York.

Initial claims for state unemployment benefits increased 2,000 to a seasonally adjusted 207,000 for the week ended Sep 30, the Labor Department said. Economists polled by Reuters had forecast 210,000 claims for the latest week.

For much of September, claims hovered in the lower end of their 194,000-265,000 band for this year. Employers are generally reluctant to let go of their workers following difficulties finding labour in the aftermath of the Covid-19 pandemic. An Institute for Supply Management survey on Wednesday found that services businesses still viewed the labour market as “very competitive,” with some employers reporting difficulties backfilling positions.

Unadjusted claims fell 2,875 to 172,775 last week. Claims in Ohio dropped 1,629, which together with moderate decreases elsewhere more than offset a 1,650 increase in California.

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Claims could push higher this month as the United Auto Workers (UAW) strike, now in its third week, constrains supply chains and forces manufacturers to temporarily lay off more non-striking workers. Ford Motor, General Motors and Chrysler-parent Stellantis have furloughed and laid off hundreds of workers because of strike impacts.

Though conditions remain tight, the labour market is gradually cooling. The government reported on Tuesday that there were 1.51 job openings for every unemployed person in August and unfilled positions increased by the most in two years.

US stocks opened lower. The US dollar was steady against a basket of currencies. US Treasury prices fell.

Layoffs decline

A separate report from global outplacement firm Challenger, Gray & Christmas on Thursday showed US companies announced 47,457 job cuts in September, down 37 per cent from August. Announced layoffs were, however, 58 per cent higher compared to the same period last year. Employers announced 146,305 job cuts in the third quarter, down 22 per cent from the April-June quarter.

Labour market resilience suggests the Fed could keep interest rates higher for some time. Most economists believe the central bank is done hiking rates. Since March 2022, it has raised its benchmark overnight interest rate by 525 basis points to the current 5.25 per cent-5.50 per cent range.

The number of people receiving jobless benefits after an initial week of aid, a proxy for hiring, slipped 1,000 to 1.664 million during the week ending Sep 23, the claims report showed.

The claims data have no bearing on September’s employment report, due for release on Friday, as they fall outside the survey period. According to a Reuters survey of economists, nonfarm payrolls likely increased by 170,000 jobs last month after rising 187,000 in August. The unemployment rate is forecast dipping to 3.7 per cent from 3.8 per cent in August. REUTERS