The number of Americans filing new claims for unemployment benefits dropped surprisingly last week amid a labor market that remains tight.
Initial claims for state jobless benefits fell by 13,000 to a seasonally adjusted 198,000 for the week ended Oct. 14, the Labor Department said on Thursday. Economists quoted by Reuters had forecast as many as 212,000 claims for the latest week.
Although the labor market is gradually slowing, conditions remain tight, with claims at the low end of the range of 194,000 to 265,000 for the rest of the year.
So far, the UAW strike has had limited impact, disrupting the supply chain. Ford Motor, General Motors, and Stellantis, Chrysler's parent, have laid off and fired thousands of unsympathetic workers.
The Federal Reserve's Beige Book report on Wednesday noted that "the labor market gradually slowed across the country" in early October and put downward pressure on wages. According to the Beige Book, "some districts reported improvements in recruitment and retention of workers with an increase in the number of candidates," but also noted that "most districts still report continued challenges in recruiting and hiring experienced workers."
The labor market is still showing strengthening despite the US central bank raising the benchmark overnight interest rate by 525 basis points to the current range of 5.25% up to 5.50% from March 2022. It boosts consumer spending and the economy as a whole, ultimately keeping inflation high, causing many members the economy expects that the Fed will probably keep interest rates higher for a longer period of time.
The claims report covers the week in which the government conducted a survey of businesses for the nonfarm payrolls component of the October jobs report. Claims have declined between the September and October survey periods. The economy created 336,000 jobs in September, the largest number in eight months.
