The number of Americans filing new claims for unemployment benefits fell to near 57-year lows last week, signalling subdued layoffs and continued stability in the labour market.
Initial claims for state unemployment benefits dropped by 6,000 to a seasonally adjusted 194,000 in the week ended October 17, the Labor Department said on Thursday.
Economists polled by Reuters had expected claims to reach 200,000.
The latest reading puts claims within striking distance of the 189,000 recorded in mid-July, the lowest level since 1969.
Rising corporate profits amid strong domestic demand have helped shield workers from layoffs, economists said.
However, concerns are growing that tighter financial conditions and higher interest rates, as the US-Israeli war with Iran fuels inflation, could weigh on the labour market next year
Hiring remains subdued despite low layoffs
The claims data covered the period during which the government surveyed businesses for the nonfarm payrolls component of October’s employment report.
US employers added 29,000 jobs in September, following a rebound of 133,000 in August.
Economists have noted that payroll growth tends to underperform when Labor Day falls relatively late in the month, as it did in September.
The labour market remains in a “low-hire, low-fire” state, economists said, with uncertainty surrounding the Middle East conflict and tariffs on imports discouraging hiring.
The number of people continuing to receive unemployment benefits after an initial week of aid, a proxy for hiring conditions, increased by 25,000 to a seasonally adjusted 1.728 million in the week ended October 10.
That was the highest level in six weeks.
“Jobless claims are running below 2023, 2024, and 2025 for the same week. 172K last week vs. 206K a year ago. Layoffs remain extremely low. Hiring is soft, creating some labor market tension, particularly for youth, but the labor market remains low-fire,” said Eric Basmaijan, founder, EPB Research.
However, continuing claims exclude recent college graduates and others who are ineligible for benefits because of limited work histories.
Some long-term unemployed people may also have exhausted their eligibility, which is limited to 26 weeks in most states.
The median duration of unemployment stood at 11.5 weeks in September, near a 4-1/2-year high.
The unemployment rate was 4.2% that month, suggesting the labour market was not adding significant inflationary pressure.
Fed faces inflation risks as labour market holds up
The relatively stable labour market could reduce pressure on the Federal Reserve to tighten monetary policy aggressively as it confronts inflation risks stemming from the Middle East conflict.
The US central bank raised its overnight benchmark interest rate by 25 basis points in September, taking it to a range of 3.75% to 4.00%.
Economists expect the Fed to leave rates unchanged at its meeting next week before raising borrowing costs again in December. The outlook remains sensitive to the trajectory of inflation, energy prices, and hiring conditions.
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