The US labor market remains tight as initial filings for unemployment benefits decreased last week, indicating potential factors contributing to persistent inflation. The Labor Department reported that weekly jobless claims totaled a seasonally adjusted 198,000 for the period ending on October 14th. This marks a decline of 13,000 from the previous week and is below the Dow Jones estimate of 210,000. However, economists are concerned about a potential change in the declining pattern of claims, as announced layoffs have been on the rise in recent weeks.
Continuing claims, which are reported a week behind, totaled 1.734 million, increasing by 29,000 compared to the previous week. This number is higher than the FactSet estimate of 1.698 million. The Federal Reserve has been closely monitoring the labor market’s impact on monetary policy, as officials worry that a tight labor market could continue to put upward pressure on prices, even after the Fed has raised rates multiple times. Stock market futures were mixed after the report, while Treasury yields remained higher.
Despite labor unrest, such as the United Auto Workers strike, the labor market has shown few effects. Claims briefly spiked over the summer but have been on a general decline since early August, consistently below 230,000 in recent weeks. This week’s report covers the survey week that the Labor Department uses for its nonfarm payrolls report. In other economic news, the Philadelphia Fed reported that its manufacturing index rose 5 points in October, although it remained in contraction territory at -9. This is lower than the forecasted -6.8, indicating contraction in the sector. However, new orders, shipments, and employment all turned positive after being in negative territory in September.