WASHINGTON: The number of Americans filing new claims for unemployment benefits dropped to near 57-year lows last week amid low layoffs, suggesting job growth picked up in October after September’s underwhelming performance.
The weekly jobless claims report from the Labour Department on Thursday, the most timely data on the economy’s health, continued to show no material stress in the labour market from the oil price shock stemming from the US-Israeli war with Iran.
Economists say strong growth in profits amid robust domestic demand, and a smaller workforce against the backdrop of retirements and an immigration crackdown by the Trump administration, were shielding workers from layoffs. There are, however, worries that tightening financial conditions and higher interest rates because of the drawn-out Middle East conflict could undercut the labour market next year.
“The administration’s immigration policies may have tightened up the labour markets where companies are unable to find the help they need to produce their goods and services so they are holding tight to the workers they have,” said Christopher Rupkey, chief economist at FWDBONDS.
“Workers are suddenly irreplaceable in many industries.” Initial claims for state unemployment benefits fell 6,000 to a seasonally adjusted 194,000 for the week ended October 17. Economists polled by Reuters had forecast 200,000 claims for the latest week. It was the sixth consecutive week that claims remained at or below the 200,000 mark.
Claims are within striking distance of the 189,000 level touched in mid-July, which was the lowest reading since 1969. The four-week moving average of claims, seen as a better measure of labour market trends as it irons out week-to-week volatility, dropped 1,000 to a record low 197,750.
The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls component of October’s employment report. The four-week average of claims fell between the September and October survey weeks, suggesting a pickup in payrolls this month.
Payrolls increased by 29,000 jobs in September after rebounding by 133,000 in August. Payrolls tend to under perform when Labour Day falls relatively late in the month as was the case in September. Economists continue to view the labour market as still in a “low-hire, low-fire” state.
But uncertainty from the war and tariffs on imports has stymied hiring. Financial markets were little moved by the claims data.
HIRING REMAINS SLUGGISH
The claims report showed the number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, increased 25,000 to a still-low seasonally adjusted 1.728 million during the week ended October 10.
The so-called continuing claims, however, do not include recent college graduates and others who are ineligible for benefits due to little or no work history.