The numbers: The number of people who applied for unemployment benefits fell by 12,000 in mid-October to a three-week low of 214,000, as more people who couldn’t work after Hurricane Ian returned to their jobs.
Economists polled by the Wall Street Journal had forecast new claims to total 230,000 in the seven days ended Oct. 15. The figures are seasonally adjusted.
The number of people applying for jobless benefits is one of the best barometers of whether the economy is getting better or worse.
New unemployment filings had crept higher in the past month, but they are extremely low and signal the labor market is still tight.
Big picture: The economy is headed for turbulent times, possibly even recession. A majority of economists think a downturn is coming and most CEOs are preparing for one.
The reason? Rapidly rising interest rates. The Federal Reserve has lifted the cost of borrowing to squelch the highest inflation in 40 years, a strategy bound to slow the economy.
The Fed also wants to cool off a red-hot labor market to prevent wages from rising so fast as to add to inflation. The result is likely to be less hiring, more layoffs and higher unemployment.
Key details: Thirty-eight of the 53 states and US territories that report jobless claims showed a decline and 15 posted an increase.
The biggest decline in new claims occurred in Florida, where they rose sharply after the hurricane as people were displaced from their jobs. Puerto Rico also reported a sharp drop in claims as it recovered from storm damage.
The only state to report a sizable increase in unemployment filings was Missouri.
The number of people already collecting unemployment benefits, meanwhile, rose by 21,000 to 1.39 million. They remain near a 50-year low, however.
One caveat on jobless claims: The government’s adjusted data has been more erratic since the pandemic.
New jobless claims before seasonal adjustments, for instance, were much lower at 178,369 last week. Historically that’s an extremely low reading.
Looking ahead: “Businesses appear to be reluctant to let workers go, given struggles with persistent shortages,” said chief economist Rubeela Farooqi of High Frequency Economics. “We expect layoffs to rise gradually over coming months as demand slows in response to aggressive Fed tightening.”
Market reaction: The Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
were set to open higher in Thursday trades.