New unemployment claims and planned layoffs both fell in late September, with layoffs near their lowest pace in decades. Companies are still holding back on new hiring, though, as energy costs and a recent rate hike make expansion costlier.
Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 197,000 for the week ended September 26, below the 200,000 economists polled by Reuters had forecast. Claims have now held below that level for three straight weeks, near levels last seen in 1969.
Layoffs keep falling
Planned layoffs by US employers dropped 18% to 43,281 in September, according to Challenger, Gray & Christmas, down 20% from a year earlier. So far this year, employers have announced 573,195 layoffs, down 39% compared with the first nine months of 2025, and third-quarter job cuts fell 43%.
Economists said robust corporate profit growth and resilient demand were shielding workers from layoffs for now. Carl Weinberg, chief economist at High Frequency Economics, said elevated energy costs and material prices will eventually force firms to lay off marginal workers to protect margins, but there is no sign of that yet.
Hiring stays cautious
Hiring plans increased by 90,787 last month, sharply up from 12,325 in August, but hiring intentions were still down 23% from a year ago — the lowest tally for any September since 2011. Challenger, Gray & Christmas said the usual seasonal hiring surge starting in September was absent.
"Companies are in a wait-and-see period right now," said Andy Challenger, chief revenue officer at the firm, citing high energy costs, an uncertain war in Iran, and a recent rate hike that could make hiring more expensive.
Fed watches for overheating
The Federal Reserve raised its benchmark rate by 25 basis points to 3.75%-4.00% last month, its first hike in three years. Financial markets have since priced in a 37.1% chance of another hike at the October 27-28 meeting, down from about 68.6% a week earlier.
Continuing claims, a proxy for hiring, dropped 11,000 to 1.701 million for the week ended September 19, the lowest level since April 2023. Some economists said historically low layoffs, if sustained, could raise questions about the labor market overheating, with implications for monetary policy.
Source: Investing.com
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