Initial applications for unemployment benefits in the United States fell to the lowest level in more than two months, underscoring the reluctance of companies to cut jobs even as broader economic conditions soften.
The Labor Department said Thursday that claims dropped by 14,000 to 218,000 in the week ending September 20.
The figure came in well below the Bloomberg survey forecast of 233,000 and the Dow Jones consensus estimate of 235,000.
The decline takes applications to their lowest point since mid-July, easing fears that the labor market is losing momentum too quickly.
The previous week’s figure was revised up slightly to 232,000, highlighting the persistence of fluctuations in the weekly data.
However, the broader trend remains encouraging, with the four-week moving average falling to 237,500.
Continuing claims show little movement
Continuing claims, which measure the number of people already receiving unemployment benefits, dipped by 2,000 to 1.926 million for the week ending September 13.
That leaves the insured unemployment rate unchanged at 1.3 percent, reflecting steady conditions.
The four-week moving average of continuing claims also declined modestly, to 1.93 million.
Unadjusted data told a similar story.
Actual initial claims under state programs dropped by 14,822 to 180,611, far sharper than the seasonal factors had anticipated.
Insured unemployment in state programs fell by over 32,000 to 1.73 million, with the unadjusted unemployment rate easing to 1.1 percent.
A year earlier, the rate stood at the same level, though the total number of people receiving benefits was lower, at 1.63 million.
Fed outlook shaped by labor market signals
The fresh data comes against the backdrop of a Federal Reserve recalibration of monetary policy.
On Tuesday, Fed Chair Jerome Powell emphasized that concerns about a softer labor market were now outweighing stubborn inflation pressures in the central bank’s decision-making.
The Federal Open Market Committee cut interest rates last week for the first time in 2025, citing “a marked slowdown” in supply and demand dynamics.
Powell cautioned that “in this less dynamic and somewhat softer labor market, the downside risks to employment have risen.”
Investors are now turning their attention to the release of the personal consumption expenditures price index due Friday.
The PCE index is the Fed’s preferred measure of inflation and is expected to provide further clarity on the outlook for monetary policy.
Markets are also bracing for the possibility of a partial government shutdown, which could inject additional uncertainty into the economic picture.
Labor market resilience
Despite pockets of weakness in hiring and broader evidence of cooling, the claims figures highlight the resilience of American employers, who remain reluctant to shed staff.
Analysts say that while the labor market is no longer as tight as in 2022 or early 2023, the absence of large-scale layoffs continues to provide a floor for household spending and economic activity.
With jobless claims retreating to their lowest since July, the near-term narrative points to stability rather than sudden deterioration, even as policymakers and investors watch closely for signs of strain.
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