Jobless Claims Fall by Most in Nearly 4 Years
Applications Drop 33,000 After Fraud-Linked Spike in Texas
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Initial applications for jobless benefits in the US dropped by the most in nearly four years, reversing an unusually large jump in the prior week and consistent with low levels of layoffs in the economy.
Initial claims decreased by 33,000 to 231,000 in the week ended Sept. 13, according to Labor Department data released Sept. 18. That’s in line with levels seen throughout this year and not far off the pre-pandemic trend. The median forecast in a Bloomberg survey of economists called for 240,000 applications.
Continuing claims, a proxy for the number of people receiving benefits, declined to 1.92 million in the previous week.
The decline unwinds a large jump in the prior week, when initial claims rose to the highest level inĚýnearly four years. That period included Labor Day, and the data can be more volatile around holidays. Also, the advance was mostly concentrated in Texas, which a state official attributed to attempted fraud.
In the latest report, Texas said the prior week’s jump reflected layoffs in multiple industries including wholesale trade, arts and entertainment, health care and technical services.
(Bloomberg)
The overall drop in initial claims suggests companies are still holding onto workers in an uncertain economic environment. Even so, there are signs of weakness underway in the labor market, from a substantial slowdown in the pace of job growth in recent months to cooling in both supply and demand for workers.
After leaving interest rates unchanged all year, the Federal Reserve resumed rate cuts Sept. 17 due to signs of stress in the job market. Chair Jerome Powell said he canĚýno longerĚýcharacterize it as “very solid,” and policymakers see greater risk of higher unemployment.
“Today’s report casts doubt on any theories from last week that layoffs have suddenly taken off,” Carl B. Weinberg, chief economist at High Frequency Economics, said in a note. “It also undermines calls for more and bigger rate cuts, both at the Fed and in the markets.”
The four-week moving average of initial claims, a gauge that helps smooth out volatility, was little changed at 240,000.
Before adjusting for seasonal factors, initial claims declined by more than 10,000 last week, with roughly half of the decrease due to Texas. Applications in Connecticut and Michigan also dropped notably.
In North Carolina, continuing claims were reported as just 205 — the lowest in data back to 1987. The North Carolina Department of Commerce confirmed that the figure was a “technical error” that is being corrected, and that the accurate number is 19,355 for the week ended Sept. 6.
“Consequently, when the data is corrected, we can expect the national continuing claims number to rise around 20,000,” JPMorgan Chase & Co.’s Abiel Reinhart said in a note. “That would still leave claims within the range of earlier weeks.”
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