Layoffs in the U.S. remained extremely low at the end September, but could a slowing economy cause them to rise soon?
The numbers: The number of people who applied for U.S. jobless benefits at the end of September rose to a one-month high of 219,000, partly reflecting a three-week-old strike at General Motors that has idled tens of thousands of workers. There was still little evidence of rising layoffs more broadly, however.
Initial jobless claims, a rough way to measure layoffs, rose by 4,000 to 219,000 in the seven days ended Sept. 28, the government said Thursday.
Economists polled by MarketWatch has forecast a 218,000 reading.
What happened: Raw or actual claims — before seasonal adjustments — surged in Ohio and remained elevated in Michigan, two states with large auto industries. Some 250,000 workers at GM GM, -0.92% and some of its parts suppliers have been sidelined during the strike.
Once workers return to work and get back pay, they have to return any government benefits they received to tide them over.
Claims registered the biggest declines last week in California and Kansas.
The more stable monthly average of new claims was unchanged 212,500, just a little above its 2008 post recession low. The four-week average usually gives a more accurate read into labor-market conditions than the more volatile weekly number.
The number of people already collecting unemployment benefits, known as continuing claims, declined by 5,000 to 1.65 million. That’s also near a a cycle low.
Big picture: The slowing U.S. economy isn’t producing as many new jobs, but layoffs have stayed extremely low despite scattered reports of more companies giving workers the ax.
Employment growth has almost come to a standstill in manufacturing, for example, and retailers have been shedding jobs for months.
Yet other parts of the economy such as high-tech, health care and hospitality are still hiring, keeping the unemployment rate near a 50-year low.
Economists are watching jobless claims closely to see if layoffs begin to increase soon. The upcoming U.S. Labor Department September employment report on Friday has also put Wall Street on guard.
What they are saying? “I would attribute the bulk of the backup in claims over the past two weeks to the GM strike,” wrote Amherst Pierpont chief economist Stephen Stanley in a note to clients. “Perhaps the most striking observation is that a nationwide GM strike has only nudged the number of new filers up by a few thousand. Twenty years ago, such an event would have generated a large spike in claims and a massive blow to the economy.”
Market reaction: The Dow Jones Industrial Average DJIA, -0.89% fell slightly while the S&P 500 SPX, -0.75% edged higher in early Thursday trades. Stocks have nose dived in the past two days on growing worries about the threat of recession after a batch of negative readings on the economy.
The 10-year Treasury yield TMUBMUSD10Y, -4.76% fell to 1.58%. The yield has sunk from a seven-year high of 3.23% last October.