Jobless Claims Fall as Layoffs Remain Low

The number of Americans who filed for unemployment benefits last week fell as layoffs remain low.

On Thursday, the U.S. Department of Labor reported that jobless claim applications dropped by 12,000 to 216,000 for the week ending October 26. This number is less than the 227,000 jobless claims experts expected.

The four-week average of jobless claims—which evens out some of the week-to-week fluctuations—was 236,500, a drop of 2,250 from the previous week’s revised average.

Meanwhile, the total number of Americans collecting unemployment benefits dropped by 26,000 to 1.86 million for the week ending October 19.

Weekly applications for unemployment benefits are widely considered representative of layoffs in a given week.

U.S. Layoffs Remain Low

Layoff announcements dropped 23.7 percent in October to a three-month low.

Companies announced 55,597 layoffs in October, compared to the 72,821 announced in September, according to outplacement company Challenger, Gray and Christmas.

From October 2023 to October 2024, there were 664,839 layoffs, which is 3.7 percent higher than layoffs in the first ten months of 2023. The 664,839 number is the highest since 2020 when the COVID-19 pandemic caused massive job losses of roughly 2.16 million through that year’s first ten months.

Strong Job Market Fluctuates

Applications for unemployment benefits averaged 213,000 a week during the first four months of 2024 before rising in May. In late July, jobless claims hit 250,000. But this month, jobless claims have steadily decreased.

Meanwhile, the Labor Department reported in August that 818,000 fewer jobs were added from April 2023 through March this year than were originally reported. But in September, 254,000 jobs were added. The department’s October jobs report comes out on Friday.

Fed Cut’s Interest Rates

In September, the Federal Reserve lowered its benchmark interest rate, which was at a 23-year high, by a half-percentage point to between 4.75 and 5 percent—in response to a weakening red-hot job market and receding consumer prices.

The Fed raised its benchmark rate, the federal funds rate, 11 times in 2022 and 2023 to curb high inflation, which hit both the United States and countries around the world after the pandemic. September’s interest rate cut was the first in four years.

The federal funds rate is the target interest rate at which commercial banks borrow and lend their extra reserves to one another overnight. If the federal funds rate continues to decrease, the cost of consumer borrowing—including mortgages, auto loans and credit cards—should go down over time.

The Fed’s goal is to bring inflation down without putting the economy into a recession in a rare so-called soft landing.

This article includes reporting from The Associated Press.