WASHINGTON, Oct 22 (Reuters) – The number of Americans filing new claims for unemployment benefits dropped to near 57-year lows last week, pointing to low layoffs and labor market stability.
Initial claims for state unemployment benefits fell 6,000 to a seasonally adjusted 194,000 for the week ended October 17, the Labor Department said on Thursday. Economists polled by Reuters had forecast 200,000 claims for the latest week.
Claims are within striking distance of the 189,000 level touched in mid-July, which was the lowest reading since 1969.
Economists say rising profits amid strong domestic demand were 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.
The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls component of October’s employment report.
Payrolls increased by 29,000 jobs in September after rebounding by 133,000 in August. Payrolls tend to underperform when Labor Day falls relatively late in the month as was the case in September. Economists continue to view the labor market as still in a “low-hire, low-fire” state. But uncertainty from the war and tariffs on imports has stymied hiring.
The claims report showed the number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, increased 25,000 to a seasonally adjusted 1.728 million during the week ended October 10.
The so-called continuing claims, however, do not include recent college graduates and others who are ineligible for benefits due to little or no work history.
Some long-term unemployed people may have exhausted their eligibility, which is limited to 26 weeks in most states, keeping continuing claims at low levels. The median duration of unemployment was 11.5 weeks in September, near a 4-1/2-year high. Still, with the unemployment rate at 4.2% in September, the labor market is not a source of inflation.
Economists said that reduced the need for the Federal Reserve to aggressively tighten monetary policy as it battles the inflation fallout from the Middle East conflict. The US in September raised its overnight benchmark interest rate by 25 basis points to the 3.75%-4.00% range.
Economists expect the Fed to stay pat at its meeting next week and hike borrowing costs again in December.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci and Dan Burns)
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