By Scott Kanowsky
Investing.com -- The number of Americans filing for unemployment insurance unexpectedly dropped to its lowest mark since April last week, according to data from the Labor Department.
Initial jobless claims for the week ending on September 24 fell on a seasonally-adjusted basis to 193,000, sinking from a downwardly revised reading of 209,000 in the previous period. Economists had expected the figure to climb to 215,000.
The four-week moving average, which aims to smooth out volatility in the series, also came in at 207,000, a decrease of 8,750 from the prior week.
Meanwhile, continuing claims - a common proxy for hiring - extended a recent streak of declines by 29,000 to 1.347 million.
"[T]he low level of claims is a reminder that labor market conditions remain extremely tight even as we head toward a mild recession next year," Nancy Vanden Houten, an analyst at Oxford Economics, wrote in a note. "The imbalance between the supply and demand for workers, which is putting upward pressure on wages, is a key factor behind the Fed's plans to continue aggressively raising interest rates."
The Federal Reserve increased its target range for Fed Funds by another 75 basis points to 3%-3.25% last week, a level that chair Jerome Powell said was only at the lower end of what could be considered restrictive for the economy. The central bank's new 'dot-plot' foresees borrowing costs moving up by more than another percentage point before they plateau next year.
Although anecdotal reports have suggested that more firms are beginning to dismiss employees, economists have said that employers are still looking to hold on to the workers they currently have rather than broadly cull their payroll. Ian Shepherdson, chief economist at Pantheon Economics, said in a note that a softening in the job market in the world's largest economy now "appears unlikely to come via rising layoffs."
Investors will get a fresh look at the state of the U.S. labor market next week with the release of September's nonfarm payrolls report. The consensus estimate among analysts is that the data will show that 250,000 jobs were added during the month, down from 315,000 in August.