Unemployment Benefits Claims Fall

WASHINGTON (Reuters) – The number of Americans filing new applications for unemployment benefits fell last week, suggesting the labor market continued to chug along. The abrupt slowdown in job growth in October was likely an aberration.

Initial claims for state unemployment benefits dropped by 4,000 to a seasonally adjusted 217,000 for the week ended Nov. 9, according to the Labor Department. Economists polled by Reuters had forecast 223,000 claims for the latest week.

Claims surged in early October due to distortions from Hurricanes Helene and Milton, as well as a strike by factory workers at Boeing (NYSE:BA). However, layoffs remain historically low, supporting the economy.

Lou Crandall, chief economist at Wrightson ICAP (LON:NXGN), stated, "While many employment-related indicators point to a significant softening in labor market conditions this year, that change has not carried over to the unemployment insurance data thus far."

Economists are optimistic about job growth regaining momentum in November as the Boeing strike has ended, allowing the company to scrap rolling furloughs. Nonfarm payrolls increased by only 12,000 jobs in October, the least in nearly four years.

Easing labor market conditions might prompt the Federal Reserve to deliver a third interest rate cut next month, despite stalled progress in lowering inflation. Last week, the U.S. central bank cut its benchmark overnight interest rate by 25 basis points to the 4.50%-4.75% range.

The Fed began its policy easing cycle with a large half-percentage-point rate cut in September, marking the first reduction in borrowing costs since 2020. The central bank raised rates by 525 basis points in 2022 and 2023 to combat inflation.

Additionally, the number of individuals receiving benefits after an initial week of aid—considered a proxy for hiring—decreased by 11,000 to a seasonally adjusted 1.873 million during the week ending Nov. 2. This decline likely reflects the end of Boeing-related furloughs and reduced disruptions from the hurricanes.