U.S. Unemployment Claims Surge Amid Hurricanes and Boeing Strike

WASHINGTON (Reuters) – The number of Americans filing new applications for unemployment benefits surged last week, partially driven by Hurricane Helene and furloughs at Boeing during a nearly four-week-old strike at the U.S. plane manufacturer.

Initial claims for state unemployment benefits increased by 33,000 last week to a seasonally adjusted 258,000 for the week ending October 5, according to the Labor Department.

Economists surveyed by Reuters had predicted 230,000 claims for the most recent week. Significant increases in unadjusted claims were reported in North Carolina and Florida, with additional rises observed in Washington state. Hurricane Helene, which struck Florida and devastated large areas of the U.S. Southeast in late September, is expected to continue affecting claims data in the upcoming weeks.

The labor market's short-term outlook may also face distortions due to Hurricane Milton, which hit Florida on Thursday, causing deadly tornadoes, destroying homes, and leading to power outages.

Although striking workers are ineligible for unemployment benefits, their industrial action is reverberating through the supply chain and other businesses that depend on Boeing, resulting in temporary layoffs.

Boeing has announced temporary furloughs impacting tens of thousands of employees. The approximately 33,000 machinists who went on strike last month could adversely affect October's employment report, which will be released just before the November 5 presidential election.

In September, nonfarm payrolls saw their largest increase in six months, with the unemployment rate dropping to 4.1% from 4.2% in August. Economists predict that Federal Reserve officials will overlook any sharp declines in payrolls or increases in the unemployment rate, potentially leading to a 25 basis points interest rate cut in November.

Last month, the U.S. central bank reduced its benchmark interest rate by a noteworthy 50 basis points to the 4.75%-5.00% range, marking the first cut in borrowing costs since 2020 and emphasizing rising risks to the labor market.

The number of individuals receiving benefits after the initial week of aid, which serves as a proxy for hiring, rose by 42,000 to a seasonally adjusted 1.861 million during the week ending September 28, as indicated by the claims report.