US initial jobless claims fell to a 57-year low last week, while third-quarter productivity growth beat forecasts and unit labor costs declined. Economists say the data shows the labor market is not a source of inflation, though uncertainty over the Middle East conflict is constraining hiring.
Initial claims for state unemployment benefits fell 6,000 to a seasonally adjusted 189,000 for the week ended October 31, the Labor Department said. Economists polled by Reuters had forecast 196,000 claims for the latest week.
The reading matched the level touched in mid-July, which was the lowest since 1969. Claims have stayed mostly below 200,000 since mid-September, but some economists viewed the low level as a function of a smaller labor force amid an immigration crackdown, rather than fewer job cuts.
Planned layoffs fall 71% from a year earlier
Outplacement firm Challenger, Gray and Christmas reported that US-based employers announced 43,994 job cuts in October, up 2% from September. Planned layoffs dropped 71% compared to October 2025.
Hiring plans jumped 57% from October 2025 to 444,692 workers, but the work is likely mostly seasonal. The report also showed continuing claims rose 23,000 to 1.718 million during the week ended October 24.
Productivity surges as labor costs fall
Separately, the Bureau of Labor Statistics said nonfarm productivity increased at a 3.6% annualized rate in the third quarter. Economists had forecast a 2.8% rate.
Unit labor costs fell at a 0.7% rate last quarter, the first decline since the second quarter of 2025. Economists had forecast labor costs rising at a 0.6% pace.
Economists and policymakers are hoping that an artificial intelligence spending blitz will translate into significant productivity gains. However, Stephen Stanley, chief US economist at Santander US Capital Markets, said: "AI has yet to make a noticeable contribution."
Fed holds rates, economists expect December hike
Benign wage inflation gives the Federal Reserve more latitude to focus on rising price pressures stemming from the US-Israeli war with Iran. The central bank last week left its benchmark rate in the 3.75%-4.00% range, and economists expect it to raise borrowing costs in December.
Source: Reuters via Investing.com
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