The number of Americans applying for new unemployment benefits unexpectedly fell last week, but more people were collecting benefits in mid-October, raising the risk of a rise in the unemployment rate this month.
Initial applications for state jobless benefits fell by 15,000 to 227,000, seasonally adjusted, for the week ended Oct. 19, the Labor Department said on Thursday. The decrease in applications due to Hurricane Helene offset the sharp increase in applications due to Hurricane Milton.
Economists polled by Reuters had expected 242,000 applications for the latest week. Hurricanes Helene and Milton made it difficult to get a clear picture of the labor market.
A "Beige Book" report by the Federal Reserve on Wednesday described employment as "increasing slightly" in early October, "with more than half of counties reporting little or moderate growth and the rest reporting little or no change."
The report also noted that "many districts reported low employee turnover rates, and layoffs were reported to remain limited," adding that "demand for workers decreased slightly, with hiring focused more on replacement than growth."
A more than month-long strike by about 33,000 machinists at Boeing has affected jobs along the troubled planemaker's supply chain as well as non-striking workers, also clouding the labor market picture.
The company's unionized workers on the West Coast voted Wednesday to reject a new contract proposal that includes a 35% pay increase over four years and increased contributions to the employee's 401(k) retirement plan.
The number of people receiving benefits after the first week of aid, which is an indicator of hiring, rose by 28,000 to 1.897 million, seasonally adjusted, for the week ended Oct. 12, based on the application report.
The so-called continuous claims cover the period in which the government surveys households for the October unemployment rate. The unemployment rate decreased to 4.1% in September from 4.2% in August. The increase from 3.4% in April 2023 to 4.3% in July this year prompted the Federal Reserve to cut interest rates by an unusually large 50 basis points last month.
The first reduction in borrowing costs since 2020 lowered the Fed's policy rate to a range of 4.75%-5.00%. The Fed raised rates by 525 basis points in 2022 and 2023 to control inflation. It is expected that the Fed will cut rates by 25 basis points next month.
