- Initial unemployment claims dropped by 6,000 to 189,000 in the week ended October 31.
- Employers announced 43,994 job cuts in October, while seasonal hiring plans rose sharply.
- Worker productivity increased at a 3.6 per cent annualized rate in the third quarter, while unit labor costs fell.
The number of Americans filing new claims for unemployment benefits has fallen to a 57-year low, suggesting employers are reluctant to let workers go even as hiring remains subdued and some job seekers struggle to find new positions.
Initial claims for state unemployment benefits dropped by 6,000 to a seasonally adjusted 189,000 in the week ended October 31, according to the Labor Department. The figure matched the level recorded in mid-July, the lowest since 1969, and came in below economists' expectations of 196,000.
The figures point to a labor market where layoffs remain limited, but companies are not necessarily expanding their permanent workforces. Uncertainty surrounding the prolonged US-Israeli conflict with Iran is also weighing on employers' willingness to hire.
The latest data suggest the US economy is maintaining some labor market resilience, but the experience of people looking for work is more complicated.
Why are job seekers still struggling despite fewer layoffs?
Employers announced 43,994 job cuts in October, according to global outplacement firm Challenger, Gray & Christmas. That was 2 per cent higher than September but 71 per cent lower than October 2025. It was also the lowest number of announced cuts for any October since 2023.
At the same time, companies announced plans to hire 444,692 workers, a 57 per cent increase from a year earlier. However, much of this recruitment is expected to be seasonal, as retailers and other businesses prepare for the holiday shopping period.
"Employers are holding on to the workers they have heading into the holidays, and the hiring they are announcing is largely short-term, seasonal work," said Andy Challenger, chief revenue officer at Challenger, Gray & Christmas.
"Companies want the flexibility to meet holiday demand without adding permanent headcount."
This reluctance to create permanent positions can leave unemployed people waiting longer to find work, even when companies are not announcing large numbers of layoffs.
The Labor Department's report showed that continuing claims, which track people receiving unemployment benefits beyond their first week, increased by 23,000 to 1.718 million in the week ended October 24.
Although the figure remains relatively low, it suggests that some people who have lost their jobs are taking longer to move into new employment. The measure does not capture everyone who is unemployed, including some recent college graduates and people who have exhausted their eligibility for benefits.
Economists also offered different explanations for the unusually low number of initial claims. Strong domestic demand and corporate profits have helped companies retain workers, while others believe a smaller labor force, partly linked to tighter immigration enforcement, may also be contributing to the figures.
There were 1.06 job openings for every unemployed person in September, up from 1.02 in August, another indication that the labor market could be tightening.
What do rising productivity and falling labor costs mean for the economy?
A separate Labor Department report provided another positive signal for the US economy, showing that worker productivity increased at an annualized rate of 3.6 per cent in the third quarter.
The increase was stronger than economists' expectations of 2.8 per cent and followed revised growth of 2.1 per cent in the second quarter.
Productivity measures how much output businesses generate for each hour worked. Stronger productivity can allow companies to produce more without increasing their workforce or labor expenses at the same pace.
The improvement also pushed unit labor costs down by 0.7 per cent in the third quarter, the first decline since the second quarter of 2025. Economists had expected these costs to increase by 0.6 per cent.
Unit labor costs measure the cost of labor required to produce one unit of output. A decline can help businesses manage expenses and reduce pressure to raise prices, although it does not guarantee that consumer inflation will fall.
The figures may also give the Federal Reserve some room to focus on inflation pressures beyond the labor market.
The central bank kept its benchmark interest rate in the 3.75 per cent to 4 per cent range at its latest meeting, while acknowledging that inflation remained elevated. Economists are watching whether rising energy and other costs linked to the Middle East conflict will influence its next decisions.
"AI has yet to make a noticeable contribution. Productivity gains have been fairly consistent over the past several years," said Stephen Stanley, chief US economist at Santander US Capital Markets.
He said many businesses had adopted more efficient ways of working during the pandemic and continued using those changes afterwards.
The productivity figures do not yet establish how much artificial intelligence is contributing to efficiency gains. Economists are watching whether increased investment in AI will translate into a sustained improvement in output.
The next major indicator will be the Labor Department's October employment report, scheduled for Friday (6). Economists surveyed by Reuters expect nonfarm payrolls to have increased by 65,000 jobs, following a gain of 29,000 in September, with the unemployment rate forecast to remain at 4.2 per cent.
For now, the latest figures describe a labor market with few layoffs but limited permanent hiring. The challenge for job seekers is that keeping a job and finding a new one are two very different measures of economic strength.
