The number of Americans filing for unemployment benefits hit a one-year high last week, which analysts say is more likely due to Hurricane Helen than a broader slowdown in the job market. .
The Labor Department reported Thursday that applications for unemployment benefits jumped by 33,000 to 258,000 for the week of October 3. This is the highest figure since August 5, 2023 and well above the 229,000 expected by analysts.
Analysts pointed to a sharp increase in unemployment benefit claims in states hardest hit by Hurricane Helene last week, including Florida, North Carolina, South Carolina and Tennessee.
Jobless claims are widely considered representative of U.S. layoffs in a given week, but they can be volatile and subject to revision.
The four-week claims average, which smooths out some of this weekly volatility, increased by 6,750 to 231,000.
The total number of Americans receiving unemployment benefits increased by 42,000 to about 1.86 million for the week of September 28, the highest figure since late July.
Some recent labor market data suggests that high interest rates may ultimately take a toll on the labor market.
In response to weakening jobs data and falling consumer prices, the Federal Reserve last month cut its benchmark interest rate by half a percentage point, with the central bank shifting its focus from controlling inflation to supporting the labor market. The Fed’s goal is to achieve a rare “soft landing,” whereby it will lower 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 been falling steadily, moving closer to the Fed’s 2% target, leading Chairman Jerome Powell to declare recently that it was largely under control.
In a separate report on Thursday, the government said US inflation had reached its lowest point since February 2021.
During the first four months of 2024, applications for unemployment benefits averaged just 213,000 per week before increasing in May. They reached 250,000 in late July, confirming the idea that high interest rates were finally cooling a red-hot U.S. labor market.
In August, the Labor Department reported that the U.S. economy created 818,000 fewer jobs between April 2023 and March of this year than initially reported. The revised total is also seen as evidence that the job market is steadily slowing, forcing the Fed to start cutting interest rates.
Despite all signs of a slowdown in the labor market, U.S. employers added a surprisingly strong 254,000 jobs in September, easing some concerns about a weakening labor market and suggesting that the pace of hiring is still strong enough to support a growing economy.
Last month’s gain was much larger than economists expected, and it represents a sharp increase from the 159,000 jobs created in August. After rising for most of 2024, the unemployment rate fell for a second straight month, from 4.2% in August to 4.1% in September.
