The number of Americans applying for unemployment aid soared last week to its highest level in a year, which analysts said was likely more a result of Hurricane Helene than a further weakening of the labor market.
The U.S. Department of Labor reported Thursday that claims rose from 33,000 to 258,000 for the week ending Oct. 3. This is the highest number since August 5, 2023 and well above the 229,000 that analysts expected.
Analysts highlighted sharp increases in unemployment claims in the states hardest hit by Hurricane Helene last week, including Florida, North Carolina, South Carolina and Tennessee.
The number of jobless claims is widely considered a reflection of layoffs in the United States in a given week; however, they can be volatile and prone to updates.
The four-week average, which smooths out some of the week-to-week volatility, rose by 6,750 to settle at 231,000.
High interest rates could take a toll on the labor market
The total number of Americans receiving unemployment benefits increased by 42,000 to approximately 1.86 million during the week of September 28, the most since late July.
Some recent labor market data has suggested that high interest rates could finally be taking their toll on the labor market.
In response to weakening jobs data and falling consumer prices, the Federal Reserve last month cut its benchmark interest rate by half a percentage point as the central bank shifts its focus from controlling inflation to supporting the labor market. The Fed’s goal is to achieve a rare “soft landing,” in which it reduces inflation without triggering a recession.
It was the Fed’s first rate cut in four years after a series of rate increases in 2022 and 2023 took the federal funds rate to a two-decade high of 5.3%.
