New filings for jobless benefits dropped unexpectedly last week despite the impact of Hurricane Ian in Florida.
New claims fell by 5.3% to 214,000, below the pre-pandemic average in 2019 as layoffs remain historically low, according to government data released Thursday.
In the bigger context, new jobless claims continued to point to a tight labor market. That means there is still more work to be done by the Federal Reserve as concerns over a wage-price spiral mount.
Our preferred measure for the long-term trend in new claims, the 13-week moving average, fell again to 225,000 for the week ending Oct. 15. After rising steadily from May to August, the series has trended downwardly ever since.
Our forecast is showing a greater chance of a recession happening in the second half of next year. Until then, we don’t expect new claims to spike up anytime soon.
But there is also reason for the Federal Reserve to feel encouraged in its effort to tame inflation.
Even as the Fed waits for the full impact of its rate hikes to kick in, the labor market has been resilient. That strength suggests the economy should be able to weather more rate increases in the last two months of the year and potentially early next year as the Fed tries to engineer a soft landing to the downturn.
