Weekly US jobless claims rise modestly By Reuters

WASHINGTON (Reuters) – The number of Americans filing new jobless claims rose marginally last week, but Hurricane Helene’s storm surge in the U.S. Southeast and hits to Boeing (NYSE: ) and ports could distort the labor market picture in the near term .

Initial claims for state jobless benefits rose 6,000 last week to a seasonally adjusted 225,000 for the week ended Sept. 28, the Labor Department said Thursday.

Economists polled by Reuters had estimated 220,000 claims for the past week.

Demand is at levels consistent with a stable labor market, which is anchored by low layoffs.

However, the calm is likely to be temporarily shaken after Helene wreaked havoc in North Carolina, South Carolina, Georgia, Florida, Tennessee and Virginia late last week. It destroyed homes and infrastructure and killed at least 162 people across the six states. Homeland Security Secretary Alejandro Mayorkas said this week that the recovery will involve a years-long “billion-dollar action.”

Work stoppages by about 30,000 machinists at Boeing and 45,000 ports on the US East Coast and Gulf Coast are also expected to cloud the outlook for the labor market.

Although the striking workers are not eligible for unemployment benefits, their industrial action is likely to spill over into the supply chain and other businesses dependent on Boeing and the ports and cause temporary layoffs.

Boeing announced temporary furloughs for tens of thousands of employees, including what it said were “a large number of U.S. executives, managers and employees.”

The number of people receiving benefits after an initial week of aid, a proxy for employment, fell by 1,000 to a seasonally adjusted 1.826 million in the week ended Sept. 21, the claims report showed.

So-called continuous claims settled after rising to a more than 2 1/2-year high in July following policy changes in Minnesota that allowed the state’s non-skilled workers to file for unemployment benefits during summer school vacations.

The labor market slowdown is driven by lower hiring following 525 basis point rate hikes by the Federal Reserve in 2022 and 2023 to combat inflation.

The US central bank last month cut its benchmark interest rate by an unusually high 50 basis points to a range of 4.75%-5.00%, the first cut in borrowing costs since 2020, acknowledging the growing risks for the labor market. The Fed is expected to cut interest rates again in November and December.

The claims data is unrelated to the September employment report because it falls outside the survey week. Nonfarm payrolls likely rose 140,000 last month, after rising 142,000 in August, according to a Reuters poll. Job gains averaged 202,000 per month over the past year.

If the Boeing and port strikes continue beyond next week, they could reduce wages in October ahead of the Nov. 5 presidential election.

The unemployment rate is expected to remain unchanged at 4.2% in September. It rose from 3.4% in April 2023 as an increase in immigration boosted labor supply.