Weekly jobless claims rose more than expected last week in a sign of cooling in the labor market.
New data from the Department of Labor showed 258,000 initial jobless claims were filed in the week ending Oct. 5, up from 225,000 the week prior and above the 230,000 economists had expected. This marked the highest number of weekly unemployment claims since August 2023.
Meanwhile, the number of continuing applications for unemployment benefits hit 1.86 million, up 42,000 from the week prior.
"Claims rose markedly in some of the states most impacted by Hurricane Helene and the Boeing strike although some unimpacted states saw large increases as well," Oxford Economics lead US economist Nancy Vanden Houten wrote in a note to clients on Friday. "Claims will likely continue to be elevated in states affected by Helene, Hurricane Milton and the Boeing strike until its resolved.
Vanden Houten added, "We think, though, that the Fed will view these impacts as temporary and still expect it to lower rates by 25bps at the November meeting."
Read more: Jobs, inflation, and the Fed: How they're all related
The report comes despite a blowout September Jobs report that was released just six days prior. Data from the Bureau of Labor Statistics released Friday showed the labor market added 254,000 payrolls in September, higher than the 150,000 expected by economists. Meanwhile, the unemployment rate fell to 4.1% from 4.2% in August.
Also out on Thursday, a closely watched report on US inflation showed consumer price increases ticked lower on an annual basis during the month of September, but "core" prices remained sticky, according to the latest data from the Bureau of Labor Statistics released Thursday morning.
"I think the Fed has shifted the goalposts," Yardeni Research chief markets strategist Eric Wallerstein told Yahoo Finance. "They're much more focused on the labor market."
Following the two releases, markets quickly moved to price in less of a chance the Fed wouldn't cut interest rates at its November meeting. Traders now see a 14% chance that the Fed will hold rates steady in November, down from the nearly 20% chance the day prior, per the CME FedWatch Tool.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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