Jobless Claims Hover Near 57-Year Lows in ‘Low-Hire, Low-Fire’ Labor Market
The number of Americans filing new claims for unemployment benefits fell again last week, extending a streak that has kept layoffs near historic lows even as hiring slows. Initial claims dropped by 2,000 to a seasonally adjusted 197,000 for the week ended Oct. 3, the Labor Department said Thursday, according to Reuters.
Claims have held near 57-year lows for four straight weeks, and the Wall Street Journal noted the latest decline was the fifth straight weekly drop. That means very few people are losing their jobs, even in an economy where employers are pulling back on new hires.
September payrolls told the other half of the story. Employers added just 29,000 nonfarm jobs last month, a figure that points to weak hiring. So-called continuing claims, which track people already collecting benefits, rose by 17,000 to 1.72 million in the week ended Sept. 26.
Economists call this combination a low-hire, low-fire labor market. In plain language, companies are reluctant to bring on new workers because of uncertainty over tariffs and the U.S.-Israeli war with Iran, yet they are also reluctant to let go of the workers they already have.
For workers, the picture is mixed. Job security is unusually high, with layoffs running near record lows. But for people looking for work or trying to switch jobs, the market is thin, because companies are creating few openings.
The Federal Reserve is watching this balance closely. At its Sept. 15-16 meeting, the central bank raised its benchmark interest rate by a quarter percentage point to a range of 3.75% to 4.00%, its first increase in three years. Minutes from that meeting showed officials judged the labor market to be close to maximum employment.
Rate hikes make borrowing more expensive, and the Fed uses them to keep inflation in check. By moving in September, policymakers signaled that they see little slack left in the job market despite the slow pace of hiring.
What happens next depends on which side of the equation changes. If hiring picks up, the market stays healthy. If layoffs rise instead, the cushion that has protected workers so far could give way.