U.S. weekly jobless claims rise more than expected

WASHINGTON (Reuters) - The number of Americans filing applications for unemployment benefits rose slightly more than expected last week, but the trend in claims remained consistent with strong labor market conditions.

Initial claims for state unemployment benefits increased 5,000 to a seasonally adjusted 218,000 for the week ended Oct. 26, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims would rise to 215,000 in the latest week. The Labor Department said no states were estimated last week.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, slipped 500 to 214,750 last week.

The claims data has no bearing on October’s employment report, which is scheduled to be published on Friday, as it falls outside the survey period.

While the low levels of claims suggest solid labor market conditions, job growth is expected to have slowed sharply in October because of a 40-day strike by workers at General Motors (GM.N).
Government data last Friday showed 46,000 GM employees were idle at the automaker’s plants in Michigan and Kentucky during the October nonfarm payrolls count.

Striking workers who do not receive a paycheck during the payrolls survey period are treated as unemployed. The strike by members of the United Auto Workers union, which ended last Friday, had ripple effects on the auto industry.

Economists estimated the work stoppage cut between 75,000 and 80,000 jobs from October payrolls. As a result, the employment report will likely show only 89,000 jobs were added in October, down from 136,000 in September, according to a Reuters survey of economists.

The unemployment rate is forecast to rise one-tenth of a percentage point to 3.6%. Even discounting the GM strike, job growth has been slowing in line with ebbing demand and a shortage of workers.

The Federal Reserve cut interest rates on Wednesday for the third time this year, but signaled a pause in the easing cycle, which started in July when it reduced borrowing costs for the first time since 2008. Fed Chair Jerome Powell acknowledged the moderation in the pace of job growth this year, but said “the job market remains strong.”

Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid rose 7,000 to 1.69 million for the week ended Oct. 19. The four-week moving average of the so-called continuing claims increased 8,750 to 1.69 million.