The American labor market is resilient; existing home sales hit their lowest level in more than 16 years in October
By Lucie Mutikani
WASHINGTON, Nov 12 (Reuters) – The number of Americans filing new claims for unemployment benefits rose more than expected last week but remained at a level consistent with a stable job market, allowing the Federal Reserve to focus on fighting inflation.
Economists expect layoffs to remain low through the end of the year, although seasonal volatility linked to the holiday season could cause spikes in claims data. The government last week reported an increase in nonfarm payrolls in October and a drop in the unemployment rate to 4.1% from 4.2% in September. Labor market resilience persists despite ongoing conflict in the Middle East, “which is driving inflation.”
“Businesses continue to retain their workforce,” said Olivia Cross, senior U.S. economist at Pantheon Macronomics. “We expect layoffs to remain low through the fourth quarter, but then face some pressure next year in response to recent tightening financial conditions and companies’ growing use of AI.”
Initial claims for state unemployment benefits increased by 9,000 to 200,000 on a seasonally adjusted basis for the week ended Nov. 7, the Labor Department said Thursday. Economists polled by Reuters had forecast 195,000 claims for last week.
Registration applications have remained at or below 200,000 since mid-September and remain close to the level of 189,000 reached in mid-July, the lowest since 1969, suggesting a tightening of the job market. But because wages are growing at a moderate rate, most economists don’t believe that’s the case.
Some say the shrinking workforce, due to retirements and the Trump administration’s crackdown on immigration, is the main cause of historically low claims.
“A generally smaller labor force could mean fewer workers likely to apply for unemployment insurance,” said Veronica Clark, an economist at Citigroup. Of course, this would “still be consistent with a low unemployment rate, with continued claims suggesting the unemployment rate could even fall further towards around 4.0% based on the data by early 2027.”
The claims report showed that the number of people receiving unemployment benefits after an initial week of aid, an indicator of hiring, fell by 20,000 to a seasonally adjusted 1.697 million in the week ended Oct. 31. But so-called continuing claims do not include some unemployed workers, such as recent college graduates and others who have little or no work history.
Some people may also have exhausted their eligibility for benefits, limited to 26 weeks in most states, keeping continued claims at relatively low levels. The median duration of unemployment increased from 11.5 weeks in September to 11.9 weeks in October, the longest since November 2021.
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