Weekly applications for unemployment insurance in the US have risen beyond expectations, marking their highest level since August 2023, as revealed by the latest data from the government. The seasonally adjusted figure for initial claims has jumped by 33,000, bringing the total to 258,000 for the week ending on October 5.
This notable increase surpasses the anticipated level of 230,000, according to a survey of analysts conducted by Bloomberg. The initial claims figure for the previous week was unrevised at 225,000. In addition, the four-week moving average now stands at 231,000, which reflects an increase of 6,750 from the prior unrevised average.
Unadjusted claims have also climbed, adding 53,570 weekly to reach a total of 234,780. Nancy Vanden Houten, Lead US Economist at Oxford Economics, commented on the significant rise in claims, noting, "Claims rose markedly in some of the states most impacted by Hurricane Helene and the Boeing strike, although some unimpacted states saw large increases as well." She further added, "Claims will likely continue to be elevated in states affected by Helene, Hurricane Milton, and the Boeing strike until it's resolved." Regarding Hurricane Milton, which made landfall Wednesday evening, current information from the National Weather Service indicates the storm is tracking away from the Florida east coast.
However, it is anticipated that Milton will gradually weaken and may become a powerful extratropical low later tonight, lingering well off the southeast US coast. Earlier this week, Boeing made headlines by retracting its most recent pay offer to striking workers after negotiations with the International Association of Machinists and Aerospace Workers broke down.
This decision exacerbated the economic pressures felt in affected sectors. Despite these challenges, the impacts are likely to be viewed as temporary by the Federal Reserve. Vanden Houten expects the central bank to consider a reduction in rates by 25 basis points at its upcoming policy meeting in November.
In September, the Fed had already reduced its benchmark lending rate by 50 basis points, bringing it to a range of 4.75% to 5%. As for continuing claims for the week ended September 28, these totaled 1.86 million, which was ahead of the Bloomberg consensus that predicted a total of 1.83 million. Continuing claims saw a surge of 42,000 compared to the previous week's average, which was revised down by 7,000.
The four-week moving average for continuing claims is now reported at 1.83 million, which is an increase of 4,500 from the prior week's downwardly revised average, according to the Department of Labor. Michigan has observed the highest increase in initial claims for the week ending September 28, with a total rise of 1,187.
Other states following include Washington and Indiana. In contrast, the most significant decrease in claims was seen in Georgia, where claims fell by 1,237, with Florida and Texas also noted for declines. In a recent report, the Bureau of Labor Statistics highlighted a positive economic development, revealing that the US economy added more jobs than anticipated in September, while the unemployment rate saw a slight decrease..