US weekly jobless claims unexpectedly fall
THE number of Americans filing new applications for unemployment aid unexpectedly fell last week, but more people were collecting benefits in mid-October, which raises the risk of a rise in the jobless rate this month.
Initial claims for state unemployment benefits dropped 15,000 to a seasonally adjusted 227,000 for the week ended Oct 19, the Labor Department said on Thursday (Oct 24). An ebb in claims from Hurricane Helene more than offset a rush of filings from Hurricane Milton.
Economists polled by Reuters had forecast 242,000 claims for the latest week. Helene and Milton are making it harder to get a clear pulse on the labour market.
The Federal Reserve’s “Beige Book” report on Wednesday described employment as having “increased slightly” in early October, “with more than half of the districts reporting slight or modest growth and the remaining districts reporting little or no change.”
It also noted that “many districts reported low worker turnover, and layoffs reportedly remained limited” adding that “demand for workers eased somewhat, with hiring focused primarily on replacement rather than growth.”
A more than one-month long strike by about 33,000 machinists at Boeing, which has impacted employment down the troubled planemaker’s supply chain as well as its non-striking workforce, also obscured the labour market picture.
The company’s unionised West Coast workers voted on Wednesday to reject a proposed new contract that included a 35 per cent pay hike over four years and enhanced contributions to workers’ 401(k) retirement plans.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 28,000 to a seasonally adjusted 1.897 million during the week ending Oct 12, the claims report showed.
The so-called continuing claims covered the period during which the government surveyed households for October’s unemployment rate. The jobless rate dropped to 4.1 per cent in September from 4.2 per cent in August. Its rise from 3.4 per cent in April 2023 to 4.3 per cent in July this year was the trigger for the US central bank’s unusually large 50 basis points rate cut last month.
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The first reduction in borrowing costs since 2020 lowered the Fed’s policy rate to the 4.75 to 5 per cent range. The Fed hiked rates by 525 basis points in 2022 and 2023 to curb inflation. It is expected to cut rates by 25 basis points next month. REUTERS
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