Fewer Americans filed for unemployment benefits last week as layoffs remained at historically healthy levels despite elevated interest rates.
The Labor Department reported Thursday that jobless claim applications fell by 12,000 to 216,000 for the week of Oct. 26. That’s fewer than the 227,000 analysts forecast.
The four-week average of weekly claims, which quiets some of the week-to-week fluctuations, fell by 2,250 to 236,500.
Weekly applications for jobless benefits are considered a proxy for U.S. layoffs.
In response to weakening employment data and receding consumer prices, the Federal Reserve cut its benchmark interest rate in September by a half of a percentage point as the central bank shifted its focus from taming inflation toward supporting the job market. The Fed is trying to pull off a rare “soft landing,” whereby it brings down inflation without tipping the economy into a recession.
It was the Fed’s first rate cut in four years after a series of increases starting in 2022 that pushed the federal funds rate to a two-decade high of 5.3%.
Inflation has retreated steadily, approaching the Fed’s 2% target and leading Chair Jerome Powell to declare recently that it was largely under control.
Also Thursday, the government reported that an inflation gauge closely watched by the Fed fell to its lowest level in three-and-a-half years.
During the first four months of 2024, applications for jobless benefits averaged just 213,000 a week before rising in May. They hit 250,000 in late July, supporting the notion that high interest rates were finally cooling a red-hot U.S. job market.
In August, the Labor Department reported that the U.S. economy added 818,000 fewer jobs from April 2023 through March this year than were originally reported. The revised total was also considered evidence that the job market has been slowing steadily, compelling the Fed to start cutting interest rates.
Despite some signs of labor market slowing, America’s employers added a surprisingly strong 254,000 jobs in September, easing some concerns about a weakening job market and suggesting that the pace of hiring is still solid enough to support a growing economy. The Labor Department issues its October jobs report on Friday.
Continuing claims, the total number of Americans collecting jobless benefits, declined by 26,000 to 1.86 million for the week of Oct. 19. Last week’s figure, which had been the most in three years, was revised down by 12,000.