New claims for jobless benefits rose to 217,000 last week, yet they remained below the pre-pandemic level where they have been since September, the Labor Department reported on Thursday.
So far, new jobless claims, which increased by a modest 5,000, have stayed remarkably resilient as the labor market has continued to add hundreds of new jobs each month.
With the United Auto Workers having reached a deal to end its strike, we should not expect any significant upside surprises in claims data, except for a potential government shutdown this month.
There are, however, increasing signs that the labor market is cooling, which should help maintain the upward trend in new claims.
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Still, we don’t see new claims, which are a proxy for layoffs, reaching the threshold level of 250,000 that signifies a recession, given the resilience of the economy. That is aligned with our call that the economy has a 60% chance of a soft landing and avoid a recession over the next 12 months.
Continuing claims rose again for the week ending Oct. 21, breaking the 1.8 million level for the first time since April. While continuing claims remained within a normal range seen before the pandemic, the notable increase in the past couple of months should be monitored.
The takeaway
Low initial jobless claims have been a sign of a resilient labor market which remains an important driver for income growth and spending as a whole, keeping the economy on a strong footing.
