Jamie Spencer
While U.S. jobless claims fell unexpectedly last week, signaling some resilience in the labor market, the number of people still collecting unemployment benefits hit its highest level in nearly three years. This suggests that although fewer people are losing jobs, those who are unemployed are facing growing challenges in finding new positions.
A Surprising Drop in New Unemployment Claims
The Labor Department reported a decrease of 15,000 in new applications for state unemployment benefits for the week ending October 19, bringing the seasonally adjusted total to 227,000. This was lower than the 242,000 expected by economists and marked the second straight week of declines. Unadjusted claims also fell by over 22,000, with decreases in several states, including Georgia, North Carolina, and Texas, balancing out an increase in Florida.
The reduction in claims follows an earlier spike caused by Hurricane Helene, which had driven filings to their highest level in over a year. Additionally, the anticipated surge in claims from Hurricane Milton has been more subdued than initially feared, helping to keep new claims lower than expected.
Rising Continued Claims Show Tougher Job Market for the Unemployed
Despite the drop in new claims, the number of Americans still receiving unemployment benefits—referred to as continued claims—has climbed to its highest level since 2020. This rise indicates that while fewer people are losing jobs, those who are unemployed are struggling to secure new positions, reflecting a softer labor market.
Economists expect that the Federal Reserve will take this mixed labor market data into account but are unlikely to overreact to fluctuations caused by recent hurricanes or strikes, such as the ongoing Boeing labor dispute involving 33,000 workers.
Labor Market Faces Complex Pressures
The Federal Reserve’s “Beige Book” report, released Wednesday, described employment as having “increased slightly” in early October, with most regions reporting modest growth or stability in the job market. However, the report also noted that demand for workers has eased, with hiring efforts focused primarily on replacing workers rather than expanding workforces.
At the same time, historically low layoffs have kept the labor market afloat, even as hiring slows. Economists estimate that the recent hurricanes could subtract up to 40,000 jobs from October’s nonfarm payrolls. Forecasts for October job growth range between 100,000 and 125,000 jobs, a significant slowdown from the 254,000 added in September.
Looking Ahead: The Impact of External Factors
External disruptions, including strikes and weather events, continue to cloud the outlook for the labor market. While the dip in new jobless claims may suggest some short-term relief, the rise in continued claims paints a more complicated picture for those already out of work. The employment report for October, set to be released shortly before the U.S. presidential election, is expected to provide more clarity on the labor market’s direction.
The ongoing Boeing strike could also affect the job data for October, as striking workers are counted as unemployed if they are not paid during the survey period. These workers, however, do not qualify for unemployment benefits, adding another layer of complexity to the overall employment situation.
While the drop in new jobless claims is a positive signal, the rising number of long-term unemployment claimants highlights the continued challenges in the U.S. labor market. As the Federal Reserve weighs its next moves, the full impact of these mixed indicators will become clearer in the coming weeks, particularly as more data on payroll growth and unemployment emerges.
