US jobless claims rise to 258,000, highest in a year | World News

In states affected by Helene and Hurricane Milton as well as the Boeing strike, claims are expected to remain high until the strike is resolved, said Nancy Vanden Houten, senior U.S. economist at Oxford Economics. However, we believe the Fed will view this impact as temporary and continues to expect to cut rates by (25 basis points) at the November meeting.

Venden Houten said Washington state was hit hardest by the Boeing attack and accounted for a disproportionate share of the increase.

Unemployment claims are generally considered representative of U.S. layoffs in a given week, but can be volatile and subject to revision.

The four-week average of claims, which offsets some of this weekly volatility, rose 6,750 to 231,000.

The total number of Americans collecting unemployment benefits rose by 42,000 to about 1.86 million in the week of Sept. 28, the highest since late July.

Weather and labor tensions aside, some recent labor market data suggests that high interest rates may finally be taking a toll on the labor market.

The Federal Reserve cut its key interest rate by half a percentage point last month in response to weak employment data and falling consumer prices, as the central bank shifts its focus from curbing inflation to supporting the labor market. The Fed’s goal is to achieve a rare soft landing in which it lowers inflation without triggering a recession.

It was the Fed’s first rate cut in four years, after a series of rate hikes in 2022 and 2023 pushed the key interest rate to a two-decade high of 5.3 percent.

Inflation has fallen steadily and is nearing the Fed’s 2 percent target, prompting Chairman Jerome Powell to recently declare that it is largely under control.

In a separate report on Thursday, the government reported that U.S. inflation hit its lowest level since February 2021.

In the first four months of 2024, jobless claims averaged just 213,000 per week before a spike in May. They reached 250,000 at the end of July, supporting the idea that high interest rates were finally cooling the red-hot US labor market.

In August, the Labor Department reported that the U.S. economy added 818,000 fewer jobs from April 2023 to March of this year than initially reported. The revised overall reading was also seen as evidence that the job market is steadily slowing, forcing the Fed to start cutting interest rates.

Despite some signs of a labor market slowdown, America’s employers added a surprisingly strong 254,000 jobs in September, easing some concerns about a weakening job market and suggesting that the pace of hiring is still solid enough to support a growing economy.

Last month’s gain was far larger than economists expected and was well above the 159,000 jobs added in August. After rising for most of 2024, the unemployment rate fell for the second month in a row, from 4.2 percent in August to 4.1 percent in September.

First published: Oct 10, 2024 | 9:58 p.m IS