US Labour Market on Firmer Ground as Hurricane Helene, Strike Distortions Loom

  • The number of Americans filing new applications for unemployment benefits increased marginally last week, but the devastation unleashed by Hurricane Helene in the U.S. Southeast and strikes at Boeing and ports could distort the labour market picture in the near term.
  • The report from the Labour Department on Thursday showed the labour market gliding at the end of Q3 2024, a state of affairs that could allow the Federal Reserve to be in no rush to deliver large interest rate cuts. The economy also ended the third quarter on solid footing, with another report showing services sector activity rose to the highest level in just over 1.5 years in September amid strong growth in new orders.
  • Initial claims for state unemployment benefits increased by 6,000 last week to a seasonally adjusted 225,000 for the week ended September 28th. Economists polled by Reuters had forecast 220,000 claims for the latest week. Unadjusted claims fell by 1,066 to 180,647 last week. The decline, however, was less than the drop of 5,692 that had been anticipated by the model used by the government to strip out seasonal fluctuations from the data.
  • Overall claims are consistent with a stable labour market, which is being anchored by low numbers of layoffs. The calm, however, is likely to be temporarily shattered after Helene wreaked havoc in North Carolina, South Carolina, Georgia, Florida, Tennessee and Virginia late last week.
  • Work stoppages by about 30,000 machinists at Boeing and 45,000 dockworkers at U.S. East Coast and Gulf Coast ports are also expected to muddy the labour market view. Though striking workers are not eligible for unemployment benefits, their industrial action is likely to ripple through the supply chain and other businesses dependent on Boeing and ports and cause temporary layoffs.
  • Boeing has announced temporary furloughs of tens of thousands of employees. Claims in Washington state, where the planemaker has major production facilities, rose last week above their recent average. Economists are divided on the magnitude of the hit from Helene, with some estimating that claims could jump to 250,000 in the weeks ahead. Others argued the impact would be minimal.

(Source: Reuters)