The number of Americans filing new applications for unemployment benefits fell to a seven-month low last week, suggesting that job growth likely rebounded in November after abruptly slowing last month amid hurricanes and strikes.
It is, however, taking longer for the unemployed to find new work. The report from the Labor Department on Thursday also showed unemployment rolls swelling to levels last seen in late 2021. Labor market slack keeps the door open for a third interest rate cut from the Federal Reserve next month, despite a recent lack of progress lowering inflation to its 2 per cent target.
“There is no sign of incipient recession in these figures,” said Carl Weinberg, chief economist at High Frequency Economics. “The labor market is softening but not imploding.”
Initial claims for state unemployment benefits dropped 6,000 to a seasonally adjusted 213,000 for the week ended Nov. 16, the lowest reading since April. Economists polled by Reuters had forecast 220,000 claims for the latest week.
The data included the Veterans Day holiday, which could have injected some volatility. Unadjusted claims decreased 17,750 to 213,035 last week. Filings in California dropped 4,657, almost reversing the prior week’s 5,906 jump. The state offered no comment for that increase.
There were also notable declines in applications in New Jersey, Ohio, Georgia, Texas and Indiana. Filings had surged in New Jersey and Texas in the prior week, blamed on layoffs in the educational services industry as well as the healthcare and social assistance sector.
Though overall claims soared in early October amid disruptions caused by Hurricanes Helene and Milton as well as strikes by factory workers at Boeing and another aerospace company, layoffs have remained low. That is softening the hit on the labor market from sluggish hiring.
The claims data covered the period during which the government surveyed businesses for the nonfarm payrolls component of November’s employment report. Claims fell considerably between the October and November survey weeks.
The dollar was little changed against a basket of currencies. Stocks on Wall Street were poised to open higher.
Government data on Tuesday confirmed that Helene, Milton and the aerospace strikes had accounted for much of the sharp slowdown in job growth in October.
The state employment and unemployment report also showed the labor market steadily slowing. Economists estimated that the strikes and storms probably subtracted between 100,000 and 125,000 jobs from payrolls last month. Nonfarm payrolls increased by a scant 12,000 jobs in October, the smallest gain since December 2020, after rising by 223,000 in September.
The Boeing strike ended early this month after workers accepted a new contract, while rebuilding is underway in the areas devastated by the hurricanes. That creates a base of at least 100,000 jobs for November’s payrolls.
Data next week on unemployment rolls could offer more clarity on the state of the labor market in November.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 36,000 to a seasonally adjusted 1.908 million during the week ending Nov. 9, the claims report showed. The so-called continuing claims have been boosted by Boeing-related furloughs and the hurricanes.
The employment report for November could determine if the Fed cuts rates again in December. The U.S. central bank trimmed rates by 25 basis points earlier this month, lowering its benchmark overnight interest rate to the 4.50 per cent-4.75 per cent range.
The Fed embarked on its policy easing cycle with an unusually large half-percentage-point rate cut in September, its first reduction in borrowing costs since 2020. It hiked rates by 525 basis points in 2022 and 2023 to curb a surge in inflation.
