US jobless claims fall to 241,000 as hurricanes impacts fade

The number of Americans filing for unemployment benefits last week retreated to more recent levels, following a significant surge the previous week triggered by hurricanes in the Southeast.

According to the Labour Department’s Thursday report, initial claims for state unemployment benefits decreased by 19,000 to 241,000 for the week ending October 12. This figure is widely regarded as indicative of US layoffs for the week. The four-week average of claims, which helps smooth out weekly volatility, rose by 4,750 to 236,250.

Meanwhile, the total number of Americans receiving jobless benefits increased by 9,000 to approximately 1.87 million for the week of October 5, the highest level since late July.

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Last week, filings rose to their highest level since June of 2023, which economists said was likely a result of Hurricane Helene and an ongoing Boeing machinist strike. Outside of the weather and labour strife, some recent labour market data has suggested that high interest rates may finally be taking a toll on the labour market.

The claims report covered the week during which the government surveyed employers for the nonfarm payrolls component of October’s employment report. Economists expect Federal Reserve officials won’t place too much weight on the employment report when they meet in early November. The report will be released days before the Nov. 5 U.S. presidential election.

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Nonfarm payrolls increased by the most in six months in September, with the unemployment rate falling to 4.1% from 4.2% in August. The U.S. central bank last month cut its benchmark interest rate by an unusually large 50 basis points to the 4.75%-5.00% range, the first reduction in borrowing costs since 2020, highlighting rising risks to the labor market.

The Fed, which raised its policy rate by 525 basis points in 2022 and 2023 to tame inflation, is expected to lower rates by only 25 basis points next month. The number of people receiving benefits after an initial week of aid, a proxy for hiring, rose 9,000 to a seasonally adjusted 1.867 million during the week ending Oct. 5, the claims report showed.

With inputs from agencies.