The number of Americans filing for unemployment benefits last week jumped to its highest level in a year, which analysts are saying is more likely a result of Hurricane Helene - and the Boeing machinist strike - than a broader softening in the labor market.
The Labor Department reported Thursday that applications for jobless claims jumped by by 33,000 to 258,000 for the week of Oct. 3. That’s the most since Aug. 5, 2023 and well above the 229,000 analysts were expecting.
Analysts highlighted big jumps in jobless benefit applications last week across states that were most affected by Hurricane Helene, including Florida, North Carolina, South Carolina and Tennessee.
“Claims will likely continue to be elevated in states affected by Helene and Hurricane Milton as well as the Boeing strike until it is resolved,” said Nancy Vanden Houten, lead U.S. economist of Oxford Economics. “We think, though, that the Fed will view these impacts as temporary and still expect it to lower rates by (25 basis points) at the November meeting.”
Venden Houten said that Washington state was the most impacted by the Boeing strike and accounted for a disproportionate share of the increase.
Applications for jobless benefits are widely considered representative of U.S. layoffs in a given week, however they can be volatile and prone to revision.
The four-week average of claims, which evens out some of that weekly volatility, rose by 6,750 to 231,000.
The total number of Americans collecting jobless benefits rose by 42,000 to about 1.86 million for the week of Sept. 28, the most since late July.
Outside of the weather and labor strife, some recent labor market data has suggested that high interest rates may finally be taking a toll on the labor market.
In response to weakening employment data and receding consumer prices, the Federal Reserve last month cut its benchmark interest rate by a half of a percentage point as the central bank shifts its focus from taming inflation toward supporting the job market. The Fed’s goal is to achieve a rare “soft landing,” whereby it brings down inflation without causing a recession.
It was the Fed’s first rate cut in four years after a series of rate hikes in 2022 and 2023 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.
In a separate report Thursday, the government reported that U.S. inflation reached its lowest point since February 2021.
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.
Last month’s gain was far more than economists had expected, and it was up sharply from the 159,000 jobs that were added in August. After rising for most of 2024, the unemployment rate dropped for a second straight month, from 4.2% in August to 4.1% in September.
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