Last week, U.S. jobless claims fell unexpectedly, demonstrating some resilience in the labor market.However, the number of people receiving unemployment benefits increased in mid-October, indicating that the unemployment rate may rise in October.The decrease in claims was mainly due to the weakening of the impact of Hurricane Helen, which offset the increase in claims caused by Hurricane Milton.

Weekly initial claims for unemployment benefits fall

According to data from the U.S. Department of Labor, the number of initial claims for unemployment benefits fell by 15,000 in the week ending October 19, to an adjusted number of 227,000, significantly lower than economists 'expectations of 242,000, indicating that the labor market is more resilient than expected.However, natural disasters like Hurricane Milton add complexity to the interpretation of labor market trends.

Fed Watch

The Federal Reserve pointed out in its previously released Beige Book that employment growth was moderate in early October, with half of the regions reporting small or no change in employment.The report also noted that layoffs were limited and employee turnover rates remained stable.However, recruitment efforts have slowed, and more companies tend to replace existing employees rather than expand the size of the workforce.

Boeing strike exacerbates uncertainty

An important factor affecting labor market data is the ongoing strike by Boeing's 33,000 mechanical workers, which has had a ripple effect on Boeing's supply chain and could affect overall employment data.The volatility of labor market data has increased as Boeing striking workers and related workers in the supply chain join the ranks of unemployed.

The strike continued on October 23 after Boeing workers voted to reject a proposed new contract that included a 35% pay rise over the next four years and improvements to the 401(k) retirement plan, further disrupting labor market data.

Increase in the number of continued applicants

Although the number of initial claims decreased, the number of continuing claims for unemployment benefits increased by 28,000 to 1.897 million in the week ended October 12.The data, a key indicator of recruitment activity, shows that more workers have been unemployed for extended periods of time, raising new concerns about the overall labor market.

Market outlook: Possible further interest rate cuts

The increase in continuing claims coincides with the October unemployment rate and may cause the unemployment rate to rise from 4.1% in September.Earlier this year, the unemployment rate rose to 4.3% in July from 3.4% in April, prompting the Federal Reserve to cut interest rates by 50 basis points last month.As inflationary pressures subside, the Federal Reserve is expected to cut interest rates further by 25 basis points in November to deal with labor market uncertainty and provide more support for the economy.

Cautious outlook for the labor market

The continued increase in claims and unresolved labor issues such as the Boeing strike have made the labor market outlook cautious.Although the decline in initial filings shows some resilience, the overall situation is not optimistic.

A potential rise in unemployment could signal a slowdown, which will further strengthen market expectations that the Fed will continue to ease monetary policy.As inflationary pressures are contained, the Federal Reserve is expected to cut interest rates by 25 basis points next month to respond to continued challenges in the labor market and stabilize the economy.