US Jobless Claims Jump Last Week Exceeds Expectations as Jobs Market Remain Strong

The number of people filing new US jobless claims surged more than predicted last week, however, the labor market remained strong despite a falling labor market and rising interest rates.

Al Jazeera reported that the US Department of Labor said Thursday that initial applications for state unemployment benefits increased by 29,000 to a seasonally adjusted 219,000 for the week ending October 1. There were 3,000 fewer applications submitted the previous week than had been originally reported, according to updated data.

Hurricane Fiona's Impact

According to a Reuters report, Hurricane Fiona was partly to blame for the larger-than-anticipated increase in unemployment claims that the Labor Department published on Thursday, with files increasing in Puerto Rico, which was devastated by the storm in the later part of September.

There was a rise of 2,206 filings in Massachusetts and an increase of 3,749 files in Missouri. Florida had a decrease of 1,409 claims. During the aftermath of a catastrophe, claim filings often decline before picking back up.

Economists warned that Florida and the Carolinas might see an increase in initial claims in the coming weeks due to lessons learned from Puerto Rico's record-breaking claim spike after Hurricane Fiona forced the closure of companies.

A senior economist at Moody's Analytics in West Chester, Pennsylvania, Ryan Sweet, claimed it is tough to gauge "how much the labor market is cooling from initial claims, and this will be true for several weeks because of the distortions from Hurricane Fiona and Ian."

US Labor Market Remains Tight

The US labor market is still robust, though it has weakened somewhat recently. As reported by the Labor Department on Tuesday, the number of available jobs dropped to its lowest point in a year in August, per The Wall Street Journal.

The data also indicated that the number of people quitting their positions in the professional and business services sector was significantly lower in August compared to the previous months. Minor increases in layoffs were reported. As opposed to the 526,000 jobs added by businesses in July, August saw an increase of 315,000 positions.

There was a 46.4 percent increase from August to September in the number of job cutbacks disclosed by US-based firms, according to another study released Thursday by global outplacement agency Challenger, Gray & Christmas.

The retail industry saw the largest increase (68 percent) in job losses compared to the previous year. So far this year, layoffs dropped 21 percent from the same period in 2021. Employers planned to recruit 380,014 workers last month, the fewest since 2011.

On Tuesday, the government revealed that the number of job opportunities had fallen to 10.1 million, the lowest level since April 2020. Economists, however, do not anticipate significant layoffs, stating that businesses are cautious about letting go of employees after having trouble hiring in the last year owing to the COVID-19 epidemic, which prompted some individuals to leave the US labor market due to protracted sickness.

The September employment data from the Department of Labor will be made public on Friday. The median forecast from a panel of economists surveyed by the Journal was for a 275,000 increase in payrolls last month.

The average number of new claims for unemployment insurance over the previous four weeks, a figure that averages out week-to-week fluctuations, remained practically steady at 206,500.

In the week ending September 24, continuing claims-a proxy for the number of persons getting continued unemployment benefits-rose from 1.35 million to 1.36 million, per WSJ. The reporting of ongoing US jobless claims is delayed by one week.