US jobless claims plunge to 44-year low in storms' wake

A quarter of homes in the Florida Keys were destroyed by Hurricane Irma after it made landfall on September 10

Claims for US jobless benefits fell to a 44-year low in early October as labor markets recovered from the damage of Hurricanes Harvey and Irma, government data showed Thursday.

The new figures pointed to strong October job creation as the data were collected during the survey week for the Labor Department's monthly employment report.

With layoffs at record lows, the tight jobs market could also strengthen the case for a December interest rate increase by the Federal Reserve, where policymakers remain divided over the degree of slack in labor markets and the dangers of inflation.

For the week ending October 14, new claims for unemployment insurance dropped by 22,000 from the prior week to a seasonally adjusted 222,000, the lowest level since March of 1973. Analysts had been expecting a drop of only 8,000 claims.

Despite recent surges in the aftermath of the late-summer back-to-back summer hurricanes, weekly claims have now been below the symbolic level of 300,000 for 139 weeks, or more than two and a half years, the longest such stretch recorded since 1970.

The less volatile four-week moving average also fell 9,500 claims to 248,250. Meanwhile, the number of people continuing to receive weekly benefits fell to 1.88 million, also a 44-year low.

Jobless claims see big swings from week to week but can be used to gauge the prevalence of layoffs and the strength of jobs markets.

The Federal Reserve reported this week that US labor markets were experiencing "widespread" labor shortages, with employers struggling to fill open positions, particularly in transportation and construction -- but wage increases have been notably stagnant.

Analysts say employers are reluctant to let employees go for fear they may be difficult to replace, driving down claims for jobless benefits.