Weekly applications for unemployment insurance in the US rose more than expected, as revealed by government data published Thursday. Simultaneously, a separate report indicated that job cuts in the country fell last month compared to August. The seasonally adjusted number of initial claims increased by 6,000 to reach 225,000 during the week that ended on Saturday, as reported by the Department of Labor.
Analysts surveyed by Bloomberg had predicted a level of 221,000, while the previous week's figures were revised upwards by 1,000, bringing it to 219,000. In contrast, the four-week moving average saw a decrease of 750, bringing the average down to 224,250, while the prior week's average was revised upwards by 250 to also hit 225,000.
Unadjusted claims showed a decline of 1,066 from the previous week, totaling 180,647 claims. In the week ending September 21, seasonally adjusted continuing claims amounted to 1.83 million, aligning with the Bloomberg consensus. Continuing claims fell by 1,000 from the previous week's average, which experienced a downward revision of 7,000.
The four-week moving average for continuing claims registered at 1.83 million, reflecting a decline of 4,750 from the prior week's adjusted average, according to the Department of Labor. The data suggests a possibility of "some upside risk for payrolls and some downside risk for the unemployment rate," stated Thomas Simons, a US Economist at Jefferies, in a recent note.
However, he remarked that there are no particularly alarming signs for the labor market at this moment. The recent decrease in continuing claims indicates a "solid increase" in nonfarm payrolls, according to Simons. The Bureau of Labor Statistics is anticipated to report that the US economy added 150,000 nonfarm jobs in September, an increase from the 142,000 job gains reported in the previous month. In the meantime, US-based employers made 72,821 job cuts last month, marking a 4% reduction from August and an increase of 53% from September 2023, as detailed in a separate report released by Challenger, Gray & Christmas. Andrew Challenger, the senior vice president of Challenger Gray & Christmas, noted, "We're at an inflection point now, where the labor market could stall or tighten." He added, "It will take a few months for the drop in interest rates to influence employer costs, as well as consumer savings accounts.
Consumer spending is projected to rise, potentially leading to increased demand for workers in sectors focused on consumer needs." Last month, the Federal Reserve enacted a reduction in its benchmark lending rate by 50 basis points, marking its first cut since March 2020..