By Lucia Mutikani
WASHINGTON (Reuters) -The number of Americans filing new applications for jobless benefits fell last week, economists at JPMorgan and Goldman Sachs estimated on Thursday, but lackluster hiring has left many on unemployment rolls.
Initial claims for state unemployment benefits dropped to a seasonally adjusted 217,000 for the week ending October 11 from 235,000 the prior week, they calculated.
A U.S. government shutdown, now in its third week due to a political standoff between Republicans and Democrats in Washington, has halted the collection, processing and publishing of official economic data.
States have, however, continued to collect the claims data and submit it to the Labor Department’s database, which remains accessible. Economists have been using the unadjusted claims data to make estimates using seasonal adjustment factors that the government published earlier this year. Claims data was unavailable for Arizona, Massachusetts, Nevada and Tennessee.
“Our estimates assume that initial claims for Tennessee, Massachusetts, Arizona and Nevada – which didn’t appear in today’s DOL data – were in line with the latest published numbers,” Goldman Sachs said in a note. “We obtain a range between 211,000 and 225,000 using the lowest and highest levels for claims in these states this year.”
The Labor Department follows a similar practice to make estimates for states that are unable to provide data on time.
“The latest jobless claims look quite decent, and suggest layoffs remain low with movement in the unemployment rate,” said Abiel Reinhart, an economist at JPMorgan.
Claims data have become a key for Federal Reserve officials trying to assess the health of the labor market ahead of their October 28-29 policy meeting.
BOTH LAYOFFS AND HIRING REMAIN LOW
Fed Chair Jerome Powell said this week “available evidence suggests that both layoffs and hiring remain low, and that both households’ perceptions of job availability and firms’ perceptions of hiring difficulty continue their downward trajectories.”
Unemployment claims have remained within their pre-government shutdown range. They have not shown large spikes, despite the shutdown pushing thousands of federal contractors out of work.
Federal workers, hundreds of thousands of whom have been furloughed, file for claims under a separate program. Data for the program was not immediately available.
The labor market remains stuck in a “no hire” and “no fire” state, economists say. The U.S. central bank’s Beige Book report on Wednesday described demand for labor as “generally muted” in recent weeks.
A Bank of America Institute survey on Thursday found signs of a slowdown in the small business labor market. Its alternative hiring indicator based on Bank of America small business payments data decreased in September. It also noted business applications with planned wages, viewed as a signal of real job creation, have dropped below pre-pandemic norms.
Small businesses have been the main driver of job growth. Economists say President Donald Trump’s trade and immigration policies, and the growing popularity of artificial intelligence have cut demand for workers and labor supply.
The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, was unchanged at a seasonally adjusted 1.927 million during the week ending October 4, JPMorgan estimated. Goldman Sachs put its estimate of these so-called continuing claims at 1.917 million.
The unemployment rate increased to nearly a four-year high of 4.3% in August, and the elevated continuing claims suggest no improvement.
(Reporting By Lucia Mutikani; Editing by Jamie Freed)
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