Unemployment Claims Remain Below 200,000 for 4th Straight Week

The U.S. labor market remains sturdy as fewer layoffs keep weekly unemployment claims near historically low levels, government data show.

Initial jobless claims—the number of Americans filing applications for unemployment benefits—dipped by 2,000 to 197,000 for the week ending Oct. 3, according to a report released by the Department of Labor on Oct. 8.

The lower-than-expected reading marked the fourth consecutive week with claims below 200,000.

Stripping out week-to-week volatility, the four-week average slowed to 198,000, from 200,500.

Employment conditions continue to be resilient as companies stay reluctant to trim payrolls, supporting one half of the “low-fire, low-hire” description of today’s labor market.

Planned job cuts fell 20 percent year over year in September, with 43,281 announced layoffs. This was the lowest total for the month since 2022.

“Companies are in a wait-and-see period right now,” Andy Challenger, chief revenue officer at Challenger, Gray, and Christmas, said in a news release.

He noted that U.S. companies are wrestling with higher energy prices, the war in Iran, higher interest rates, and the possibility of rising healthcare costs.

“We’ve seen layoff activity subside over this year, and September continues to illustrate this point,” Challenger said.

Continuing jobless claims—a gauge of individuals currently receiving unemployment benefits—rose to a higher-than-expected 1.716 million. The previous week’s reading was adjusted lower to below 1.7 million, marking the lowest level since April 2023.

Economists use this metric as a proxy for difficulties jobseekers may have in finding employment. It could also signal that Americans have exhausted their jobless benefits since many states cap eligibility at 26 weeks.

Hot and Cold

Despite fewer people receiving unemployment benefits than a year ago, new data suggest many Americans remain skeptical about their chances of finding a job.

The mean probability of finding employment within the next three months if a job were lost today was 46 percent, down from 47.4 percent a year ago, according to the New York Federal Reserve’s Survey of Consumer Expectations.

At the same time, fewer people expect to lose their position over the next 12 months, and the odds of leaving a job voluntarily have ticked up.

Various labor market indicators suggest strong labor demand.

Private employers added 23,750 jobs per week in the four weeks ending Sept. 19, representing the fifth consecutive increase, payroll processor ADP reported on Oct. 6.

Data from the research group Institute for Supply Management show that employment in manufacturing and services also edged up modestly last month.

Still, the U.S. economy created only 29,000 new jobs in September, far below the consensus estimate of 90,000. This was also a sharp deceleration from the 133,000 added in August.

The unemployment rate also ticked up to 4.2 percent last month—above market forecasts—as more people began looking for work.

The latest numbers have muddled the labor market outlook, says Chris Osmond, chief investment officer at Fifth Third Wealth Advisors.

“September’s labor report challenged the narrative of economic resilience,” Osmond said in a note emailed to The Epoch Times.

“Hiring slowed sharply, wage growth weakened, and prior months were revised lower, suggesting the labor market may be softening more quickly than expected.”

Investors have signaled that the weaker-than-expected September jobs report will, at least in part, force the Federal Reserve to pause another interest rate hike later this month.

While traders had fully priced in an October hike, financial markets pushed back expectations for further tightening to the December meeting following the nonfarm payrolls data.

Despite elevated levels, the Fed’s go-to personal consumption expenditures (PCE) price index was softer than expected in August.

“Yet inflation remains elevated, leaving the Fed caught between deteriorating employment data and unfinished work on price stability,” Osmond added.

Minutes from the September Federal Open Market Committee meeting suggested policymakers believe one more rate hike is likely warranted before the year is finished.

Fed Governor Christopher Waller, in an Oct. 8 speech at the Central Bank of Turkey, espoused a hawkish stance to combat inflation.

“If the economic data continue to come in as expected, I anticipate additional hikes to support a timelier return of inflation to our 2 percent goal,” Waller said.

“But there is some flexibility about when those hikes will occur. The hikes do not need to come at consecutive meetings, but they should be in place in an acceptable period of time.”

But Jay Hatfield, CEO and portfolio manager at Infrastructure Capital Advisors, says central banks raising interest rates is an irrational act.

“Global central banks have irrationally reacted to an oil price shock with rate hikes, led by the [European Central Bank],” Hatfield said in an emailed note to The Epoch Times.

“This action is contrary to conventional economic theory, as oil price spikes weaken the economy and rate increases further weaken economic growth but do nothing to address energy-driven inflation.”

There is a reason why monetary policymakers depend on core inflation, rather than headline inflation, he added.

Core inflation omits volatile energy and food categories. The U.S. annual core inflation rate sits at 2.4 percent.