Initial jobless claims fell to 197,000, below the 200,000 economists expected. Continuing claims rose to 1.72 million, and the median spell of unemployment is near its longest in four and a half years.
Americans are rarely losing their jobs. The ones who do are staying out of work longer.
New applications for unemployment insurance totaled 197,000 after seasonal adjustment in the week through Oct 3, 2026, according to Labor Department data released Thursday, a decline of 2,000. Economists had expected 200,000. The prior week was revised up 2,000, to 199,000. The four-week average, which smooths weekly noise, stood at 198,000, and claims have now held near their lowest levels since the late 1960s for four straight weeks.
Before seasonal adjustment, initial claims totaled about 170,300, roughly 18% fewer than in the same week last year.
The other half of the report
The number of people still collecting benefits, reported with a one-week lag, climbed 17,000 to 1.716 million in the week through Sep 26, 2026.
That figure measures how hard it is to get rehired, and it points the other way from new filings. Labor Department data show the median spell of unemployment reached 11.5 weeks in September, near its longest in four and a half years. A labor market with few layoffs and slow hiring would produce this combination: few people enter unemployment, and those who do take longer to leave it.
Jim Baird, chief investment officer at Plante Moran, said the labor market is "not showing signs of buckling" despite the rise in interest rates.
The Fed
In Istanbul on Thursday, Fed Governor Christopher Waller called the labor market "solid and stable in September" and said he expects further rate increases, though "the hikes do not need to come at consecutive meetings." A steady job market may leave officials free to keep their focus on inflation.
Rate traders were not looking for an October move. Kalshi's contract on a quarter-point increase at the Oct 27, 2026-28 meeting traded at 16 cents, implying about a 16% chance, unchanged from early Thursday.
The two-year Treasury yield, the maturity most sensitive to Fed expectations, was little changed near 4.77% in early afternoon.
The investor debate
One reading is that the labor market is healthy enough that the Fed can tighten further without causing job losses, which supports the case for additional increases by December.
Another reading focuses on the rising duration of unemployment. If employers are holding on to workers but not adding new ones, the market may be more fragile than the claims count suggests, and a turn in layoffs would hit a group of job seekers already struggling to get rehired.
Upcoming data
The University of Michigan's preliminary October consumer survey on Friday will show whether households feel the same stability. Before policymakers meet on Oct 27, 2026-28, the main remaining inflation data point is September's consumer price index, due Oct 14, 2026.