Last week, the number of Americans filing for unemployment benefits surged to the highest level in a year, but analysts say this is more due to Hurricane Helen and Boeing machinists than to a broader softening in the labor market. It is said that this is likely due to the impact of the strike.
The Labor Department reported Thursday that jobless claims for the week ending Oct. 3 rose by 33,000 to 258,000. This was the highest level since August 5, 2023, and was well above the 229,000 expected by analysts.
Analysts highlighted a significant increase in applications for unemployment benefits last week across the most affected states. hurricane helenincluding Florida, North Carolina, South Carolina and Tennessee.
“Claims will continue to rise in states affected by Helen and Hurricane Milton and the Boeing attacks until they are resolved,” said Nancy Vanden Houten, chief U.S. economist at Oxford Economics. . “However, we believe the Fed views these effects as temporary and still expects to cut rates (by 25 basis points) at its November meeting.”
Wenden-Houten said Washington state was most affected by the Boeing strike and accounted for a disproportionate share of the increase.
Claims for unemployment benefits are widely considered to represent layoffs in a given week, but claims are volatile and subject to revision.
The four-week average number of claims, which smooths out some of the weekly fluctuations, rose by 6,750 to 231,000.
The total number of Americans receiving unemployment benefits for the week of September 28 rose by 42,000 to about 1.86 million, the highest number since late July.
Beyond the weather and labor disputes, some recent labor market data suggests that high interest rates may finally be hitting the labor market.
The Fed lowered its benchmark interest rate by half a percentage point last month as it shifted its focus from curbing inflation to supporting the job market after weaker employment data and a pullback in consumer prices.
The Fed's goal is to achieve a rare “soft landing” in which inflation is contained without triggering a recession.
The Fed cut interest rates for the first time in four years after a series of rate hikes in 2022 and 2023 pushed the federal funds rate to 5.3%, its highest level in 20 years.
Inflation has steadily receded, moving closer to the Fed's 2% target, with Chairman Jerome Powell recently declaring that inflation is mostly under control.
In a separate report Thursday, the government reported that U.S. inflation has reached its lowest level since February 2021.
In the first four months of 2024, applications for unemployment benefits averaged just 213,000 per week, but rose in May.
By late July, that number had reached 250,000, confirming the idea that high interest rates are finally cooling the red-hot U.S. job market.
The Labor Department reported in August that the U.S. economy added 818,000 fewer jobs from April 2023 to March of this year than originally reported.
The revised total was also seen as evidence that the job market is steadily slowing, forcing the Fed to start cutting interest rates.
Despite signs of a slowdown in the labor market, U.S. employers added a surprisingly strong 254,000 jobs in September, allaying some concerns about a weakening job market and showing that the pace of hiring is consistent with the economy. It suggested that the economy was strong enough to support growth.
Last month's increase was much higher than economists had expected, and was a sharp increase from August's 159,000 jobs increase.
The unemployment rate rose for most of 2024, but fell for the second consecutive month to 4.1% in September from 4.2% in August.
