The numbers: The number of Americans who applied for unemployment benefits last week fell to a nine-month low of 198,000, defying expectations that layoffs would rise as higher U.S. interest rates pinched the economy.
New jobless claims declined from a revised 211,000 in the prior week, the government said.
New jobless claims slid below the 200,000 mark for the first time since mid-January.
Claims show a very low number of job losses and point to a stable economy. Unemployment claims usually top 300,000 — and eventually go a lot higher — when a recession approaches.
Economists had forecast new claims in the week ended Oct. 14 to total 210,000.
Key details: New jobless claims fell in 45 of the 53 states and territories that report these figures to the federal government. Claims rose in just eight states.
The number of raw or actual claims — that is, before seasonal adjustments —totaled a low of 181,181. That’s one of the lowest levels in more than 50 years.
The number of people collecting unemployment benefits in the U.S., meanwhile, rose by 29,000 to 1.73 million. Most laid-off workers appeared to be finding new jobs quickly, however.
Big picture: The economy is still growing and companies have plenty of demand for their goods and services. That’s why businesses are not laying off many workers.
Yet the labor market does appear to be cooling.
Hiring has slowed and wages are growing more slowly, among other things. And a new Federal Reserve survey found that employees are not switching jobs as much or being as insistent on big pay increases.
Still, a resilient labor market could put more pressure on the Fed to keep interest rates high unless wage growth moderates further and helps the central bank keep a lid on inflation:
Looking ahead: “Initial jobless claims fell to their lowest level since January last week, a reminder — if we needed one — that layoffs remain very low,” said lead U.S. economist Nancy Vanden Houten of Oxford Economics.
“The Fed will need to see more softening of labor market conditions to be persuaded that inflation is on a sustainable path back to 2% before embarking on rate cuts.”
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open lower in Thursday trades. The yield on the 10-year U.S. Treasury rose slightly to 4.96%.
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