U.S. Initial Claims back to pre-hurricane trend
Initial claims at 227k from 242k are lower than expected after two straight above trend weeks, which were attributed to hurricanes, last week to Milton and the 260k two weeks ago to Helene. The data appears to suggest a still healthy labor market now the hurricanes have passed.
The latest weekly level of 227k is in line with the pre-hurricane 4-week average. The boost after Hurricane Helene came a week after the hurricane hit but the boost from Milton, which turned out to be less than that of Helene, came as the hurricane hit, with the aftermath turning out to be less severe than feared.
The survey week for October’s non-farm payroll came last week, suggesting risk of a significant negative impact given the two hurricanes, which both came after September’s strong non-farm payroll was surveyed. Our forecast is for a rise of only 75k. However, the latest initial claims data suggests that any weakness in October’s non-farm payroll will be temporary.
Continued claims cover the week before initial claims and thus the latest data covers the payroll survey week. A rise of 28k to 1.987m, the highest level since November 2021 was seen. This also suggests downside risks to October’s payroll, and hints that the job losses from Hurricane Helene have not yet been recovered. However, continued claims look likely to follow initial claims lower next week.
