In another sign of the US labor market’s robustness, the number of Americans filing new unemployment claims fell last week to its lowest level in over 44 years, Reuters reported on Thursday:
Initial claims for state unemployment benefits fell 22,000 to a seasonally adjusted 222,000 for the week ended Oct. 14, the lowest level since March 1973, the Labor Department said. … Claims are declining as the impact of Hurricanes Harvey and Irma washes out of the data. The hurricanes, which lashed Texas, Florida and the Virgin Islands, boosted claims to an almost three-year high of 298,000 at the start of September.
A Labor Department official said claims for the Virgin Islands and Puerto Rico continued to be impacted by Irma and Hurricane Maria, which destroyed infrastructure. As a result the Labor Department was estimating claims for the islands.
The week’s massive decrease in claims was likely inflated by the Columbus Day holiday, but other data in the Labor Department’s report also indicate a very healthy labor market: The number of people still receiving benefits after an initial week of aid fell 16,000 to 1.89 million in the week ended October 7, which was the lowest level since December 1973, and the four-week moving average of continuing claims fell 22,750 to 1.91 million, the lowest since January 1974.
Reuters also highlighted a report from the Federal Reserve Bank of Philadelphia indicating strong employment in the manufacturing sector in the mid-Atlantic region this month, with the bank’s measure of factory employment rising 24 points to a record high of 30.6. That report’s average workweek index also increased, while no firms reported decreases in unemployment in October.
Unemployment claims have been hitting these 40-year lows occasionally since last year as the economy approaches full employment and the supply of available labor dries up. Although a tight labor market is generally good news for workers, the current situation has puzzled economists by putting less upward pressure on wages than their models would predict, with household incomes only recently approaching full recovery from the Great Recession. The tightness is also due in part to the large numbers of Americans, especially men, who have dropped out of the workforce entirely, possibly due to health problems and opioid abuse.
Last month’s jobs report from the Bureau of Labor Statistics showed that the continental US lost jobs to Hurricanes Harvey and Irma in September, but the overall number of jobs still grew and unemployment fell to 4.2 percent. The report did not reflect the impact of Hurricane Maria on Puerto Rico and the US Virgin Islands, however, as these territories are not included in the monthly BLS data. Each of these hurricanes did damage in the tens of billions of dollars, forcing many businesses to close at least temporarily due to catastrophic flooding.