The number of Americans filing new claims for unemployment benefits declined last week, according to economist estimates released Thursday. However, job opportunities for those recently laid off remain limited as businesses continue to hold back on hiring amid ongoing economic uncertainty.
Initial applications for state unemployment benefits fell to a seasonally adjusted 219,000 for the week ending October 25, down from 232,000 the previous week, according to calculations by JPMorgan. Similar estimates were reported by Goldman Sachs and Nationwide.
Data for Arizona, Massachusetts, and Washington, D.C. were unavailable, prompting economists to use assumptions consistent with the Labor Department’s standard methodology for missing data.
Despite the ongoing U.S. government shutdown, which has lasted nearly a month, states have continued to collect and submit unemployment figures. Economists have accessed the data independently, applying the seasonal adjustment factors published by the department earlier this year to estimate weekly jobless claims.
At current levels, the data indicates a stable labor market—one that appears strong enough to discourage additional interest rate cuts from the Federal Reserve.
“This will bolster the view of those at the Fed who think another rate cut isn’t necessary in December,” said Oren Klachkin, a financial market economist at Nationwide. “Low claims demonstrate continued economic resilience.”
On Wednesday, the Federal Reserve lowered its benchmark interest rate by another 25 basis points, setting it between 3.75% and 4.00%. Fed Chair Jerome Powell told reporters that “a further reduction in the policy rate at the December meeting is not a foregone conclusion, far from it.”
Layoffs Rise, but No Signs of Recession Yet
Despite the decline in jobless claims, economists noted an uptick in layoffs across several sectors. They attributed the trend to weakening labor demand driven by economic uncertainty, trade tariffs, and the adoption of artificial intelligence technologies.
Additionally, a reduction in labor supply—partly due to federal immigration enforcement actions—has weighed on certain industries.
Amazon announced plans this week to cut up to 14,000 corporate positions globally, while layoffs have also been reported in the automotive sector. According to a Reuters compilation, U.S. companies have collectively announced over 25,000 job cuts this month.
“The labor market still appears far away from a material shift toward a contraction in employment that might signal an imminent recession, despite some recent headlines concerning layoffs at certain large firms,” said Michael Hanson, economist at JPMorgan.
Hanson added that weak labor demand has lengthened the average duration of unemployment and lowered the break-even rate of payroll growth needed to sustain job market stability.
Federal Employees Drive Increase in Benefit Claims
Although initial jobless claims remain low by historical standards, applications for benefits among federal employees have surged in recent weeks. This increase is likely tied to over 150,000 workers who left federal payrolls at the end of September after accepting voluntary buyouts.
Some furloughed employees are also believed to have filed for unemployment benefits. However, those who later receive back pay will be required to reimburse the program.
According to Haver Analytics, claims filed under the federal program jumped to 10,062 during the week ending October 18, up from 7,287 the previous week, a sharp rise from just 572 in early September.
Meanwhile, the number of people receiving ongoing unemployment benefits, known as continued claims, rose slightly to a seasonally adjusted 1.957 million during the same week, compared with 1.945 million a week earlier, based on JPMorgan’s estimates. The figures align closely with projections from Goldman Sachs and Nationwide.
The uptick in continued claims corresponds with findings from the Conference Board’s recent survey, which revealed that consumer sentiment toward the labor market remained subdued in October. The U.S. unemployment rate stood near a four-year high of 4.3% in August.
