The number of Americans applying for unemployment benefits dropped last week, according to a Bloomberg News review of state data that was released while the federal government was shut down.
How much of a drop is there?
New data suggests that the number of Americans filing for unemployment benefits dropped to around 218,000 in the week ending October 25, down from a revised 231,000 the previous week, according to figures from the Labor Department reported by Bloomberg.
Although the US Labour department hasn’t released its regular weekly report since September 25 due to the government shutdown, it did share downloadable data from most states. Bloomberg News analysed this information and adjusted it using previously released seasonal factors from the Bureau of Labor Statistics.
This method, which includes data from nearly all states, gives results close to the official adjusted numbers. However, data for Massachusetts, Arizona, the District of Columbia, and the Virgin Islands was missing. For these areas, Bloomberg used the average of the last four weeks.
Bloomberg’s analysis also showed that continuing claims, which track the number of people still receiving unemployment benefits, rose slightly to 1.95 million for the week ending October 18, up from 1.94 million the previous week.
Low claims mean Fed is less likely to cut interest rates again, say experts
The current number of unemployment claims shows that the labour market remains strong, which could make the Federal Reserve less likely to cut interest rates again.
Oren Klachkin, a financial market economist at Nationwide, told Reuters that the data supports the view within the Fed that another rate cut in December may not be needed. He added that the low number of claims reflects the economy’s steady strength.
The US central bank reduced its key interest rate on Wednesday by another 25 basis points, bringing it to a range of 3.75% to 4.00%. Fed Chair Jerome Powell said that another rate cut in December is far from certain.
Layoffs rise, but US job market still not showing signs of collapse
There has been a recent increase in layoffs, which economists link to weaker labor demand caused by economic uncertainty, import tariffs, and the growing use of artificial intelligence. This week, Amazon announced plans to cut up to 14,000 jobs from its global corporate workforce. Job cuts have also hit the automobile industry, with US companies together announcing more than 25,000 layoffs this month, according to Reuters data.
Michael Hanson, an economist at JPMorgan, told Reuters that despite the recent headlines about job cuts at major firms, the overall job market is still far from showing a serious decline that could signal a coming recession. He added that the weaker demand for workers has increased the average time people stay unemployed and reduced the rate at which payrolls need to grow to maintain stability.
