US initial jobless claims fell 6,000 to a seasonally adjusted 194,000 in the week ended October 17, below the 200,000 economists forecast. Continuing claims rose to 1.728 million. Economists expect the Federal Reserve to hold at its meeting next week and raise rates again in December.
Initial claims for state unemployment benefits fell 6,000 to 194,000 for the week ended October 17, the Labor Department said on Thursday. Economists polled by Reuters had forecast 200,000 claims. The reading points to low layoffs and labor market stability.
Claims sit near the lowest level since 1969
The latest figure is within striking distance of the 189,000 level touched in mid-July, the lowest reading since 1969. The four-week moving average also declined from 198.75K to 197.75K, according to ActionForex. Initial claims were considerably below the 231K recorded in the comparable week a year earlier.
Economists say rising profits amid strong domestic demand are shielding workers from layoffs. There are, however, worries that tightening financial conditions and higher interest rates, as the US-Israeli war with Iran fuels inflation, could undercut the labor market next year.
Continuing claims move the other way
However, the number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 25,000 to 1.728 million in the week ended October 10. ActionForex noted that falling initial claims and rising continuing claims diverge, and that subdued layoffs do not necessarily imply equally strong hiring.
Continuing claims exclude recent college graduates and others with little or no work history. 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 was 11.5 weeks in September, near a 4-1/2-year high.
Fed outlook after the claims data
The unemployment rate was 4.2% in September, and the labor market is not a source of inflation, according to Reuters. Economists said that reduced the need for the Federal Reserve to tighten policy aggressively as it battles inflation from the Middle East conflict.
The Fed raised its benchmark rate by 25 basis points to the 3.75%-4.00% range in September. Economists expect it to stay pat next week and hike borrowing costs again in December.
Sources: Investing.com (Reuters), ActionForex
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