The number of Americans filing new claims for unemployment benefits increased more than expected last week, but remained at a level consistent with a stable labour market, allowing the Federal Reserve to focus on fighting inflation.
Economists expect layoffs to remain low through the end of the year, though seasonal volatility related to the holiday season could cause some spikes in the claims data. The government last week reported a surge in nonfarm payrolls in October and a decline in the unemployment rate to 4.1 per cent from 4.2pc in September. The resilience in the labour market is despite the ongoing Middle East conflict, which is boosting inflation.
“Firms are continuing to hold on to labour,” said Olivia Cross, senior US economist at Pantheon Macroeconomics. “We expect layoffs to remain low through the fourth quarter, but then come under some pressure next year in response to the recent tightening of financial conditions and the growing use of AI by firms.”
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