Hurricane Fiona helps to boost U.S. weekly jobless claims

  • Weekly jobless claims rise 29k to 219k
  • Current receivables increase by 15,000 to 1.361 million
  • Announced job cuts rose 46% in September to 29,989

WASHINGTON, Oct 6 (Reuters) – The number of Americans filing new jobless claims rose by the most in four months last week, but the job market remains tight even as demand for labor cools amid higher interest rates.

Some of the larger-than-expected increases in jobless claims reported by the Labor Department on Thursday were attributed to Hurricane Fiona, with filings skyrocketing in Puerto Rico, which was devastated by the storm in the second half of September.

Damage data in the coming weeks is likely to be distorted by Hurricane Ian, which wreaked havoc in Florida and the Carolinas in late September.

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“It’s difficult to assess how much the job market will cool off from the initial claims and will do so for several weeks due to the distortions from Hurricanes Fiona and Ian,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester. Pennsylvania

Initial jobless claims rose by 29,000 to a seasonally adjusted 219,000 in the week ended October 1. Last week’s rise was the largest since June. Data for the previous week has been revised to show 3,000 fewer claims than previously reported. Economists polled by Reuters had forecast 203,000 applications last week.

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Unadjusted claims rose 13,264 last week to 167,083. Applications for Puerto Rico jumped to 3,917, accounting for about 30% of applications. The archipelago typically accounts for less than 1% of national claims.

Massachusetts reported a 2,206 increase in filings, while Missouri received 3,749 more applications. In Florida, claims fell 1,409. Claims typically fall during a disaster phase before recovering.

The unprecedented surge in claims in Puerto Rico, as Hurricane Fiona shuttered businesses, pointed to an upside risk for first-time claims in Florida and the Carolinas in the coming weeks, economists said.

“This is a significant increase for Puerto Rico alone and almost certainly reflects the impact of Hurricane Fiona, which will likely prove temporary,” said Daniel Silver, an economist at JPMorgan in New York. “Hurricane Ian is also likely to impact claims data over time.”

Unemployment Claims and Layoffs

The labor market was broadly resilient, although some cracks are emerging as the Federal Reserve tightens monetary policy. The US Federal Reserve raised interest rates from near zero earlier this year to the current range of 3.00% to 3.25%, and last month signaled more big hikes were on the way this year.

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Wall Street stocks traded lower. The dollar rose against a basket of currencies. US Treasury bond prices fell.

LABOR MARKET FEAR

A separate report by global outplacement firm Challenger, Gray & Christmas on Thursday showed that US-based employers announced 29,989 job cuts in September, a 46.4% increase from August. Job cuts, led by retailers, rose 67.6% year over year. But layoffs so far this year are down 21% compared to the first nine months of 2021.

Employers also announced plans to hire 380,014 workers last month, the lowest September total since 2011.

The government reported on Tuesday that job vacancies fell by 1.1 million, the biggest drop since April 2020, to 10.1 million on the last day of August. There were 1.7 job vacancies for every unemployed person in August, keeping this measure of labor supply/demand balance above its historical average.

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Economists do not expect widespread layoffs and say after difficulties hiring last year, companies have been wary of letting their workers be laid off as the COVID-19 pandemic forced some people out of the workforce, in part due to prolonged illnesses caused by the virus .

A poll by the Institute for Supply Management on Wednesday showed that service sector employment surged in September, with several industries reporting labor shortages.

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“We expect the number of layoffs to gradually increase in the coming months in response to Fed tightening, which will weigh on demand,” said Rubeela Farooqi, chief US economist at High Frequency Economics in White Plains, New York. “But for now, given the ongoing labor shortage, companies are still holding on to workers rather than laying them off.” The claims report showed the number of people who received benefits after an initial week of help, a stand-in for hiring , up 15,000 to 1.361 million in the week ended September 24.

The claims report does not affect the September jobs report, due for release on Friday, as it falls outside the survey period. Nonfarm payrolls rose by 250,000 jobs in September, according to a Reuters poll of economists. The economy created 315,000 jobs in August.

The September unemployment rate is forecast unchanged at 3.7%, below the Fed’s median forecast of 4.4% for this year.

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Reporting by Lucia Mutikani; Edited by Chizu Nomiyama, Paul Simao and Andrea Ricci

Our standards: The Thomson Reuters Trust Principles.

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