Unemployment claims fall/ fewer layoffs/ labor market stable/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. jobless claims fell by 12,000 last week, signaling a resilient labor market as layoffs remain low. With inflation under control, the Federal Reserve has shifted to supporting employment, recently cutting interest rates in a bid for a “soft landing” that avoids recession.
U.S. Jobless Claims Drop as Layoffs Stay Low: Quick Look
- Falling Jobless Claims: Jobless claims dropped by 12,000 to 216,000, lower than expected, indicating a steady labor market.
- Four-Week Average: The average weekly claims dipped slightly, providing a smoother picture of recent trends.
- Fed’s Interest Rate Shift: To support employment, the Fed recently cut rates, pivoting from anti-inflation measures to focus on job growth.
- Labor Market Outlook: September saw robust job gains, while unemployment claims remain low, showing labor market resilience despite high rates.
- Upcoming Data: October’s job report, due Friday, may further clarify trends in hiring and economic growth.
Jobless Claims Fall as Layoffs Stay Low Amid High Rates
Deep Look
In a continued sign of labor market resilience, the number of Americans filing for unemployment benefits declined last week, reinforcing the view that layoffs remain low despite high interest rates. The Labor Department reported on Thursday that initial jobless claims dropped by 12,000 to 216,000 for the week ending October 26. This figure came in well below analysts’ predictions of 227,000, further pointing to a labor market that, while cooling, remains robust.
The four-week moving average of jobless claims—a measure that helps smooth out weekly fluctuations—also declined, falling by 2,250 to reach 236,500. Weekly jobless claims are closely monitored as an indicator of layoffs, and this sustained low level suggests that businesses are still retaining workers in large numbers even as economic conditions shift.
In a broader economic context, the recent decline in jobless claims coincides with the Federal Reserve’s efforts to support employment. In September, the Fed made its first interest rate cut in four years, reducing its benchmark rate by half a percentage point. This rate reduction marks a shift in the Fed’s approach from aggressively fighting inflation to fostering a stable job market—a move that indicates the Fed is cautiously optimistic about achieving a “soft landing.” By easing rates, the Fed hopes to reduce inflation without stifling growth or prompting a recession.
Interest rate hikes began in 2022, lifting the federal funds rate to a 20-year high of 5.3%. But inflation has gradually retreated since then, nearing the Fed’s preferred 2% target. This inflationary easing, coupled with robust job gains, recently led Federal Reserve Chair Jerome Powell to assert that inflation is “largely under control.” On Thursday, a report indicated that the Fed’s preferred inflation gauge has dropped to its lowest level in over three years, further supporting Powell’s statement and reinforcing the Fed’s strategy shift.
The U.S. job market has shown resilience in recent months, even as initial signs of cooling appeared. For the first four months of 2024, weekly jobless claims averaged 213,000, but rose gradually in May, peaking at 250,000 by late July—a potential sign that higher interest rates were beginning to have an impact on hiring. During this period, the Labor Department also issued a report revising the nation’s job creation estimates, noting that 818,000 fewer jobs were added from April 2023 to March 2024 than initially reported, lending further evidence to the narrative of a gradually slowing job market.
Despite these signals, job creation surged again in September, surprising analysts with a gain of 254,000 positions. This unexpected bump in employment has alleviated some concerns over the economy’s strength, indicating that the labor market may still be solid enough to fuel continued growth.
Continuing claims, which track the total number of Americans receiving unemployment benefits, also fell. For the week ending October 19, continuing claims dropped by 26,000 to reach 1.86 million, a figure revised down from the previous week’s three-year high of 1.88 million. This downward revision reflects an ongoing demand for workers and suggests that, overall, the labor market remains healthy.
As the Fed continues to navigate the balance between controlling inflation and sustaining employment, the coming weeks will provide further insights into the health of the U.S. economy. On Friday, the Labor Department will release its October jobs report, which is expected to offer additional clarity on employment trends and the broader economic outlook. This report will be particularly scrutinized for signs of ongoing strength in the labor market as the U.S. enters the final stretch of 2024.
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