The number of Americans filing for unemployment benefits fell last week, but the number receiving benefits rose to the highest level in nearly three years.
The Labor Department reported Thursday that jobless claims fell by 15,000 to 227,000 in the week to October 19. That’s 241,000 less than analysts had predicted.
Weekly claims for unemployment benefits are considered a surrogate for US layoffs.
As claims continued, the number of Americans receiving unemployment benefits rose by 28,000 to 1.9 million in the week to October 12. That’s the most since November 13, 2021.
The rising level of ongoing claims suggests that some on benefits are finding it harder to get new jobs. This could mean that the demand for workers is decreasing even though the economy remains strong.
Still, the four-week average for ongoing claims is as high as it’s been this summer, and not yet too alarming, analysts say.
In response to weakening employment data and falling consumer prices, the Federal Reserve cut its benchmark interest rate by half a percentage point last month as the central bank shifted its focus from taming inflation to supporting the labor market. The Fed is trying to pull off a rare “soft landing,” whereby it lowers inflation without tipping the economy into recession.
After a series of hikes starting in 2022, it was the Fed’s first rate cut in four years, pushing the federal funds rate to a two-decade high of 5.3%.
Inflation has steadily retreated, approaching the Fed’s 2% target and leading Chairman Jerome Powell to recently declare that it was under control.
Earlier this month, the government announced that US inflation had reached its lowest point since February 2021.
In the first four months of 2024, claims for jobless benefits were just 213,000 a week before rising in May. They reached 250,000 in late July, suggesting that high interest rates were finally cooling a red-hot US labor market.
In August, the Labor Department reported that the US economy added 818,000 fewer jobs from April 2023 to March of this year than initially reported. The revised total was seen as evidence that the labor market is continuing to slow, forcing the Fed to start cutting interest rates.
Despite some signs of a slowing labor market, American employers added a surprising 254,000 jobs in September, easing some concerns about a weakening labor market and suggesting the pace of hiring is strong enough to support a growing economy.
The four-week claims average, which smooths out weekly volatility, rose 2,000 to 238,500, the Labor Department said Thursday.
