Jobless claims fall by 38K, break three straight weeks of gains

New claims for unemployment insurance fell sharply last week after rising through most of September, according to data released Thursday by the Labor Department.

In the week ending Oct. 2, seasonally adjusted initial applications for jobless aid fell to 326,000, a decline of 38,000 from the previous week’s revised level of 362,000. On a nonseasonally adjusted basis, claims fell by 41,431 to 258,909.

The steep drop in claims after three weeks of increases is another welcome sign that the economic drag of the COVID-19 delta variant may have begun to fade in September. Surging cases walloped job growth and consumer confidence in August, raising serious questions about the durability of the recovery.

“The three-week detour away from declining jobless claims appears to have ended. While the most recent week is above the pandemic-era low of 312,000 a month ago, we may be able to chalk the temporary rise to a combination of reporting issues in some states, layoffs from hurricanes and maybe the spike in the COVID-19 Delta wave,” said Robert Frick, corporate economist at Navy Federal Credit Union.

“With Delta infections dropping rapidly and hurricane effects mostly finished, we should resume the path toward normal levels of weekly layoffs, about 100,000 less than current levels.”

The new claims data arrived one day before the Labor Department is set to release the September jobs report. Economists expect the U.S. to have added roughly 500,000 jobs last month, nearly doubling August’s gain of 235,000 but roughly half of July’s haul of more than 1 million.