Highlights:
-
Jobless claims estimated to rise to 232,000 last week
-
Continued claims climbed to 1.942 million, signaling slower rehiring
-
Federal worker claims increased following September buyouts
-
Economists say layoffs remain low but hiring is weak
- Advertisement - -
The Federal Reserve is expected to cut interest rates to support jobs
The number of Americans filing new applications for unemployment benefits rose last week, reflecting early signs of a cooling labor market. Economists’ estimates released on Thursday (October 23) indicate that jobless claims increased as more Americans continued to collect unemployment benefits, suggesting slower rehiring and weaker job creation.
Initial jobless claims were projected to reach a seasonally adjusted 232,000 for the week ending October 18, up from 220,000 the previous week. The estimates varied slightly among major financial institutions—Goldman Sachs pegged the number at 227,000, while JPMorgan projected 229,000. Citigroup and Nationwide also estimated 232,000. These increases in jobless claims show a gradual slowdown in the pace of hiring across various sectors.
Despite these figures, economists noted that layoffs remain relatively low, indicating that employers are retaining workers even as job growth softens.
Jobless Data Impacted by Government Shutdown
The rise in jobless claims comes amid a partial government shutdown that has limited access to official economic data. Data was unavailable for Tennessee, Massachusetts, and Colorado, prompting economists to make projections using the same modeling methods typically employed by the Labor Department when state data is missing.
Even with the data blackout, state agencies have continued to collect and submit unemployment figures. Economists are now relying on unadjusted data and previously published seasonal factors to assess the jobless situation.
Before the shutdown, which has entered its third week, hiring was already showing signs of a slowdown. Many analysts have attributed this trend to the Trump administration’s ongoing trade policies, which have created uncertainty in several industries, including manufacturing and logistics. However, despite these challenges, jobless claims have stayed within pre-shutdown levels, suggesting that layoffs have not yet surged dramatically.
Economists Say Jobless Trends Reflect Slower Hiring, Not Mass Layoffs
“The latest state-level jobless claims data suggests the labor market remains steady and that layoffs remain low,” said Oren Klachkin, financial market economist at Nationwide. “Overall, initial claims remain subdued and aren’t flagging an imminent economic downturn.”
While the number of jobless claims remains moderate, the report indicates that hiring has become sluggish. Federal workers have been particularly affected, with jobless applications among them spiking in recent weeks. This increase is linked to more than 150,000 federal employees who left government payrolls at the end of September after accepting buyouts. These furloughed employees can apply for unemployment benefits, although they are required to repay them once back pay is issued.
The surge in jobless claims from federal employees adds to broader concerns about the strength of labor demand as the economy adapts to slower growth and policy uncertainty.
Jobless Claims Data Tied to Upcoming Payrolls Report
The latest jobless claims report covers the same period used for the October nonfarm payrolls survey. Economists believe the ongoing shutdown will not distort the upcoming payroll estimates. In fact, some analysts expect the response rate for the survey to improve, potentially leading to more accurate reporting.
However, the persistence of jobless claims at elevated levels underscores a broader challenge in the job market. The number of Americans receiving unemployment benefits after their initial claim—a metric known as continued claims—increased slightly to 1.942 million for the week ending October 11, up from 1.928 million the week before, according to Citigroup. Other major banks reported similar figures, reinforcing the view that many job seekers are struggling to find new employment.
Fed Expected to Respond to Jobless Trends
The Federal Reserve is expected to cut interest rates again next week to support the slowing labor market and counteract the rise in jobless claims. Central bankers have acknowledged that while layoffs remain contained, weaker hiring momentum and declining job openings warrant additional support for economic growth.
The increase in continued jobless claims suggests the recovery in labor demand remains uneven. The US unemployment rate stood at 4.3 percent in August—its highest level in nearly four years.
“This likely reflects the low hiring environment, as typically hiring would pick up in October for the holiday season,” said Gisela Young, an economist at Citigroup. “Some indications suggest holiday hiring may be less than usual this year.”
Jobless Claims Indicate a Gradual Economic Adjustment
Overall, the rise in jobless claims signals that while the labor market remains stable, its momentum is slowing. Businesses appear cautious about adding new workers amid policy uncertainty, slower consumer demand, and rising operational costs. The steady yet rising number of jobless claims suggests that the economy is transitioning from rapid post-pandemic recovery to a more sustainable but slower growth phase.
Economists agree that the coming months will be critical in determining whether this rise in jobless claims represents a temporary adjustment or the beginning of a more pronounced cooling in employment growth. For now, the labor market continues to show resilience, but the upward trend in jobless figures highlights growing challenges in maintaining that stability.
