US Jobless Claims Hold Near Historic Low Despite Cooling Economy

(Bloomberg) — Applications for US unemployment insurance last week fell slightly, hovering around historically low levels as the labor market holds strong despite a weakening economy.

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Initial unemployment claims decreased by 1,000 to 217,000 in the week ended Oct. 29, Labor Department data showed Thursday. The median estimate in a Bloomberg survey of economists called for 220,000 new applications.

© Bloomberg Applications for benefits fell slightly while continuing claims rose

The still-low level of jobless claims reinforces what Federal Reserve Chair Jerome Powell described as an “overheated” jobs market in which demand for workers far exceeds supply. The central bank is trying to soften labor conditions in order to cool inflation, but Powell said Wednesday that hasn’t happened yet in an “obvious” way.

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Continuing claims increased to 1.49 million in the week ended Oct. 22, the highest since March. If the upward trend is sustained, that could be a sign that an increasing number of Americans are out of work for longer.

The data precedes Friday’s employment report from the government, which is expected to show the US added 200,000 jobs in October and the unemployment rate ticked up slightly to 3.6%.

Read more: Deeper US Recession Looms as Resilient Labor Market Spurs Fed

Other data showed job-cut announcements rose 48.3% in October from a year ago, led by the automotive and real estate sectors, according to Challenger, Gray & Christmas. Companies like Opendoor Technologies Inc., which practices a data-driven spin on home-flipping, and Zillow Group Inc. have laid off workers in recent weeks.

What Bloomberg Economics Says…

“Jobless claims continue to reflect employers’ resistance to let workers go with labor in short supply. However, the outlook is turning more negative… We estimate a modest rise in layoffs over the near term, consistent with gradual cooling of a still-tight labor market.”

–Eliza Winger, economist

To read the full note, click here

A separate report Thursday showed US worker productivity barely increased in the third quarter after steep declines in the first half of the year, while labor costs posted a smaller advance.

The jobless claims four-week moving average, which smooths out volatility from week to week, edged down to 218,750.

On an unadjusted basis, initial claims climbed to 185,594 last week, led by increases in California and Oregon. They fell the most in Florida as the state recovers in the aftermath of Hurricane Ian.  

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–With assistance from Jordan Yadoo.

(Adds Bloomberg Economics comment)

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