The number of Americans filing for unemployment benefits rose slightly last week, but remained near historic lows, indicating a robust labor market.
Jobless claims increase by 2,000
According to the latest report from the Labor Department, initial jobless claims increased by 2,000 to a seasonally adjusted 207,000 for the week ended Sept. 30. This was below the consensus estimate of 210,000 and slightly higher than the previous week’s revised level of 205,000.
The four-week moving average of claims, which smooths out weekly volatility, fell by 2,500 to 208,750, the lowest level since December 1969.
Jobless claims are a measure of layoffs and reflect the health of the labor market. A low level of claims indicates that employers are retaining workers and hiring new ones.
Continuing claims drop by 1,000
The report also showed that the number of people receiving benefits after an initial week of aid decreased by 1,000 to 1.664 million for the week ended Sept. 23. This was below the forecast of 1.68 million and the lowest level since November 1973.
The continuing claims data covers the week that coincides with the survey period for the monthly unemployment rate. The jobless rate was 4.4% in August and is expected to drop to 4.3% in September.
The insured unemployment rate, which measures the proportion of the labor force that is receiving unemployment benefits, was unchanged at 1.1% for the week ended Sept. 23.
Labor market outlook remains positive
The latest jobless claims data suggests that the labor market remains strong despite the disruptions caused by hurricanes Harvey and Irma in late August and early September.
The hurricanes had a limited impact on the national level of claims, as most of the affected workers were not eligible for unemployment benefits. However, some states reported an increase in claims due to hurricane-related factors.
The Labor Department said that claims taking procedures continue to be disrupted in Puerto Rico and the Virgin Islands as a result of Hurricane Maria.
The jobless claims data comes ahead of Friday’s critical nonfarm payrolls report, which is expected to show a slowdown in hiring in September due to the hurricane effects.
Economists expect that employers added 170,000 jobs in September, down from 187,000 in August. However, they also expect that wage growth picked up to 0.3% month-over-month and 2.6% year-over-year, reflecting a tight labor market.
The Federal Reserve is closely watching the labor market data as it considers the future of monetary policy. The central bank has signaled that it plans to raise interest rates one more time this year and three times next year, but it also said that it is uncertain about the inflation outlook.
A strong labor market could put upward pressure on inflation and prompt the Fed to tighten policy faster than expected. However, a weak labor market could cause the Fed to delay or pause its rate hikes.