U.S. Jobless Claims Fell to 194,000, Near 57-Year Lows

New claims for unemployment benefits fell 6,000 to a seasonally adjusted 194,000 in the week ended Oct. 17, the Labor Department reported on Thursday, Oct. 22, coming in below the 200,000 that economists polled by Reuters had forecast.

The print extends a run of historically low layoffs. Claims have now held below 200,000 for six straight weeks, and the 194,000 reading for the week ended Oct. 17 is only 5,000 above the 189,000 reading touched in mid-July, which was the lowest since 1969 — TickerGrove's calculation for the gap. Economists attribute the low layoffs in part to rising profits and strong domestic demand, which they say give employers reason to hold on to workers. The week also happened to be the reference week for the October payrolls survey, the stretch when the government surveys business establishments for the nonfarm payrolls component of the employment report, so the low layoff count sits inside the survey window for the next jobs report.

Two bases, two weeks: keeping the count straight

The comparison behind the headline needs care, because the release mixes bases and weeks by design. The seasonally adjusted 194,000 for the week ended Oct. 17 followed a week that was first reported at 199,000 for the week ended Oct. 10; weekly claims are routinely revised in the following release, and the 6,000 decline is measured against the revised level. On the unadjusted basis, the prior release counted 190,626 actual initial claims under state programs in the week ended Oct. 10, a different measure from the seasonally adjusted headline, stated here only to keep the two apart.

The benefit rolls lag by a week. Continuing claims — people still receiving benefits after an initial week of aid, a series read as a proxy for hiring — rose 25,000 to a seasonally adjusted 1.728 million for the week ended Oct. 10. In the prior release, insured unemployment was 1,710,000 for the week ended Oct. 3, with an advance seasonally adjusted insured unemployment rate of 1.1 percent for that week. The rolls have limits as a gauge: continuing claims do not include recent college graduates and others ineligible for benefits because of little or no work history, and some long-term unemployed may have exhausted their eligibility, which is limited to 26 weeks in most states. That helps explain how the rolls stay low while searches run long: the median unemployment spell reached 11.5 weeks in September, close to a 4-1/2-year high, with the unemployment rate at 4.2% in September.

Low-fire, still low-hire

That split is the labor market's defining tension. Payrolls increased by 29,000 jobs in September after rebounding by 133,000 in August, a soft hiring pace, and economists continue to view the labor market as still in a “low-hire, low-fire” state, with uncertainty from the war and tariffs on imports stymieing hiring even as employers hold on to the workers they have. One week of claims is one week: the figure says layoffs remain rare, not that hiring has recovered, and nothing in this release changes the hiring half of the picture.

A quiet print inside the Fed's blackout

The release lands inside the Federal Reserve's pre-meeting blackout ahead of its Oct. 27-28 meeting, and on this evidence the labor market is not a source of inflation. The central bank in September raised its overnight benchmark interest rate by 25 basis points to the 3.75%-4.00% range, and economists expect no move at next week's meeting, with the next increase in borrowing costs expected in December. The risk economists flag runs the other way: worries that tighter financial conditions and the higher rates that have followed the Iran war's inflation shock could weaken the labor market next year. What to watch next is whether claims hold below 200,000 for a seventh straight week, whether continuing claims keep rising from 1.728 million, and what the October payrolls report, whose survey period this claims week covered, shows about the hiring side.