New claims for unemployment benefits tumbled by much more than expected to 787,000 in the week ended October 17, the Department of Labor said Thursday.
The previous week’s level was revised down by 56,000 from 898,000 to 842,000. That means that last week’s figure, which was initially reported as a surprise jump in claims, was actually a decline of 2,000.
This suggests the economy—and the labor market in particular—has been stronger than previously thought.
The initial claims number is the lowest since March. Economists had expected around 865,000 new claims. The low range of estimates was 800,000.
Weekly claims can be volatile. Many economists prefer to look at the four-week moving average of claims for signals about the labor market. This fell to 811,250, a decline of 21,500 from the previous week’s revised average. The previous week’s average was revised down by 33,500 from 866,250 to 832,750.
Hopes for an economic support package from Congress have been dashed by House Speaker Nancy Pelosi’s determination not to do a deal with the Trump administration before election day.
Airlines have started laying off thousands of workers due to lack of demand for flights. A deal that had provided them with billions of funding in exchange for keeping workers on the payroll expired at the end of September. Theme parks have been forced to remain closed in much of the country and major movie theater chains remain shuttered. Restaurants are operating outdoors-only or a diminished capacity. Office towers are mostly empty.
Claims hit a record 6.87 million for the week of March 27. Until a month ago, each subsequent week had seen claims decline. But in late July, the labor market appeared to stall and claims hovered around one million throughout August, a level so high it was never recorded before the pandemic struck. Claims moved down again in September and have made slow, if steady, progress since.
Continuing claims, which are reported with a week’s lag, fell to 8,373,000, a decrease of 1,024,000 from the previous week’s revised level. That is the lowest figure since march.
The four-week moving average for continuing claims was 10,085,750, a drop of 1,093,500 from the previous week’s revised average. The previous week’s average was revised down by 302,500 from 11,481,750 to 11,179,250.
The highest insured unemployment rates in the week ending October 3 were in Hawaii, California, and Nevada. California saw the largest increase in initial claims.