Jobless claims drop to three-week low of 214,000 as Hurricane Ian effects fade

The payment: The number of people claiming unemployment benefits fell by 12,000 to a three-week low of 214,000 in mid-October as more people who were unable to work after Hurricane Ian returned to work.

Economists polled by the Wall Street Journal had forecast a total of 230,000 new applications for the seven days ended October 15. The figures are seasonally adjusted.

The number of people filing for unemployment benefits is one of the best barometers of whether the economy is getting better or worse.

New jobless claims have risen over the past month, but they are extremely low, signaling that the job market is still tight.

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Big picture: The economy is facing turbulent times, possibly even a recession. A majority of economists believe a downturn is imminent and most CEOs are preparing for it.

The reason? Rapidly rising interest rates. The Federal Reserve has raised borrowing costs to quell the highest inflation in 40 years, a strategy that will slow the economy.

The Fed also wants to cool a scorching labor market to prevent wages from rising so fast that inflation rises even further. The result should be fewer new hires, more layoffs and higher unemployment.

Key data: Thirty-eight of the 53 states and US territories that report jobless claims saw a decrease and 15 saw an increase.

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The biggest drop in new claims was in Florida, where they surged after the hurricane as people were forced out of their jobs. Puerto Rico also reported a sharp drop in claims as it recovered from storm damage.

The only state that reported a significant increase in jobless claims was Missouri.

The number of people already receiving unemployment benefits rose by 21,000 to 1.39 million. However, they remain near a 50-year low.

One caveat on jobless claims: The government’s adjusted data has been more unpredictable since the pandemic.

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New jobless claims before seasonal adjustment, for example, were much lower at 178,369 last week. Historically, that’s an extremely low figure.

Looking ahead: “Companies seem reluctant to lay off workers as they battle ongoing shortages,” said Chief Economist Rubeela Farooqi of High Frequency Economics. “We expect layoffs to ramp up gradually in the coming months as demand slows in response to the Fed’s aggressive tightening.”

Market reaction: The Dow Jones Industrial Average DJIA,
-0.33%
and S&P 500 SPX,
-0.67%
were set to open higher in Thursday trading.

Source

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