The number of Americans filing new applications for unemployment benefits rose slightly last week, but Hurricane Helene's devastating effects on the southeastern U.S. and strikes at Boeing and the ports may affect the labor market picture in the near term.
Initial claims for state jobless benefits rose by 6,000 last week to 225,000, seasonally adjusted, for the week ended Sept. 28, the Labor Department said on Thursday.
Economists interviewed by Reuters had forecast 220,000 claims for the latest week.
Claims are at levels consistent with a stable labor market, driven by reduced layoffs.
However, this calm may be temporary as Hurricane Helene wreaked havoc in North Carolina, South Carolina, Georgia, Florida, Tennessee and Virginia late last week. It has destroyed homes and infrastructure, and killed at least 162 people in the six states. Homeland Security Secretary Alejandro Mayorkas this week said the recovery would involve a "billion-dollar effort" that would take years.
Layoffs by about 30,000 machinists at Boeing and 45,000 port workers on the U.S. east coast and gulf coast. is also expected to disrupt the labor market picture.
Although striking workers are not eligible for unemployment benefits, their industrial action is likely to cause ripple effects in supply chains and other businesses that depend on Boeing and the port, which could lead to temporary layoffs.
Boeing has announced temporary unpaid furloughs to tens of thousands of workers, including what it says are "as many U.S.-based executives, managers and workers."
The number of people receiving benefits after a week of initial aid, an indicator of hiring, fell 1,000 to a seasonally adjusted 1.826 million in the week ended Sept. 21, according to the claims report.
The so-called ongoing claims have stabilized after hitting a more than 2 1/2-year high in July following a policy change in Minnesota that allows non-teaching staff in the state to file unemployment benefits during the summer school holidays.
The slow performance in the labor market was driven by reduced hiring following a 525 basis point interest rate hike from the Federal Reserve in 2022 and 2023 to control inflation.
U.S. central bank pad last month cut its benchmark interest rate by an unusually large 50 basis points to a range of 4.75%-5.00%, the first reduction in borrowing costs since 2020, acknowledging rising risks to the labor market. The Fed is expected to cut rates further in November and December.
These claims data did not impact the September jobs report because it was outside of the survey week. According to a Reuters poll, NFP data is expected to have risen by 140,000 last month after rising by 142,000 in August. The rate of increase in employment averaged 202,000 per month over the past year.
If the strike at Boeing and the port continues beyond next week, it could affect October employment data ahead of the November 5 presidential election.
The unemployment rate is expected to remain unchanged at 4.2% in September. It has increased from 3.4% in April 2023 due to a significant increase in immigration which increased the labor supply.
