Initial claims for state unemployment benefits increased 6,000 last week to a seasonally adjusted 225,000 for the week ended Sept. 28, the Labor Department said on Thursday.
Economists polled by Reuters had forecast 220,000 claims for the latest week.
Claims are at levels consistent with a stable labor market, which is being anchored by low layoffs.
The calm is, however, likely to be temporarily shattered after Helene wreaked havoc in North Carolina, South Carolina, Georgia, Florida, Tennessee and Virginia late last week. It destroyed homes and infrastructure, and killed at least 162 people across the six states. Homeland Security Secretary Alejandro Mayorkas this week said the recovery would involve a “multibillion-dollar undertaking” lasting years.
Work stoppages by about 30,000 machinists at Boeing and 45,000 dockworkers at the U.S. East Coast and Gulf Coast ports are also expected to muddy the labor market view.
Though striking workers are not eligible for unemployment benefits, their industrial action is likely to ripple through the supply chain and other businesses dependent on Boeing and ports, and cause temporary layoffs.
Boeing has announced temporary furloughs of tens of thousands of employees, including what it said was “a large number of U.S.-based executives, managers and employees.”
The number of people receiving benefits after an initial week of aid, a proxy for hiring, slipped 1,000 to a seasonally adjusted 1.826 million during the week ending Sept. 21, the claims report showed.
The so-called continuing claims have settled down after scaling more than 2-1/2-year highs in July following policy changes in Minnesota that allowed non-teaching staff in the state to file for jobless aid during the summer school holidays.
The slowdown in the labor market is being driven by cooler hiring following 525 basis points worth of rate hikes from the Federal Reserve in 2022 and 2023 to combat inflation.
The U.S. central bank last month cut its benchmark interest rate by an unusually large 50 basis points to the 4.75%-5.00% range, the first reduction in borrowing costs since 2020, acknowledging the growing risks to the labor market. The Fed bank is expected to cut rates again in November and December.
The claims data have no bearing on September’s employment report as they fall outside the survey week. According to a Reuters survey, nonfarm payrolls likely increased by 140,000 last month after rising by 142,000 in August. Job gains averaged 202,000 per month over the past year.
Should the Boeing and ports strikes continue beyond next week, they could depress October payrolls on the eve of the Nov. 5 presidential election.
The unemployment rate is forecast to be unchanged at 4.2% in September. It has increased from 3.4% in April 2023 as a surge in immigration boosted labor supply.
Source: Economy - investing.com
