Weekly applications for unemployment insurance in the US unexpectedly declined, with government data released Thursday revealing a drop in initial claims. The seasonally adjusted number of initial claims decreased by 12,000 to 216,000 for the week ending Saturday, while the previous week's reading was revised up by 1,000 to 228,000.
Analysts had anticipated a level of 230,000 based on a survey. The four-week moving average also fell by 2,250 to 236,500, with the prior week's average revised up by 250 to 238,750. Unadjusted claims saw a weekly decline of 3,349, totaling 200,132. For the week ending October 19, seasonally adjusted continuing claims stood at 1.86 million, slightly below the Bloomberg-polled consensus of 1.88 million.
These claims decreased by 26,000 from the previous week's average, which was revised down by 9,000, bringing the four-week moving average to 1.87 million, up by 10,750 from the previously revised average. "While the latest initial claims data may lend support to a more hawkish perspective, we do not foresee any reasons for the Federal Reserve to omit a rate cut at the upcoming meetings this year," stated Jefferies US Economist Thomas Simons in a note to clients.
The brokerage maintains its expectation for a 25-basis-point interest rate cut at each of these meetings. On Friday, the Bureau of Labor Statistics is slated to announce that the US economy added 101,000 jobs in October, marking a decrease from the previous month's gain of 254,000. US employers cut 55,597 jobs this month, down approximately 24% from September, yet up 51% compared to last year, according to a separate report by Challenger Gray & Christmas.
The aerospace and defense sectors faced the most significant job losses in October, primarily due to cuts at plane manufacturer Boeing. This year, companies have indicated plans to eliminate 664,839 jobs, the highest year-to-date total since 2020, as noted in the report. "Businesses seem to be in a holding pattern while we await election outcomes and the impending regulatory and market environment that may follow," Andrew Challenger, senior vice president of Challenger Gray & Christmas, commented.
"Significant reductions from leading companies typically produce downstream consequences, potentially leading to further job losses among suppliers and customers in the near future.".