Employers are holding on to workers, but the hiring forecast for September is modest. The gap between low firing and slow hiring is what Friday's report has to resolve.
By the measures released Thursday, American employers are not letting people go.
The Labor Department counted 197,000 new applications for jobless benefits, seasonally adjusted, in the week through Sept. 26. That was 1,000 fewer than the week before and under the 200,000 economists expected. The four-week average, which smooths weekly noise, stood at 200,000. Continuing claims, a measure of people still collecting benefits, totaled 1,701,000.
Separately, outplacement firm Challenger, Gray & Christmas said companies announced 43,281 job cuts in September, about a fifth fewer than in the same month last year. Through nine months, employers have announced fewer cuts than in the same stretch of any year since 2022.
Firing versus hiring
Low layoffs do not by themselves mean strong hiring. Economists expect Friday's report to show nonfarm employers added 84,000 jobs in September, with the unemployment rate at 4.1%.
That pairing describes a labor market where workers who have jobs keep them and employers add staff slowly. Thursday's factory survey fit the pattern: the Institute for Supply Management's employment index rose 1.5 points to 52.7, signaling growth in manufacturing payrolls.
Federal Reserve Vice Chair Philip Jefferson described the risks to activity and employment as "roughly balanced" in remarks Thursday. The Atlanta Fed's GDPNow model puts third-quarter growth at an annualized 3.7%.
Why it matters for rates
The Fed raised rates in September. Futures and prediction markets now give an October increase roughly a one-in-three chance or less. A job market that is tight on layoffs but slow on hiring gives policymakers room to wait, which is the message Jefferson and New York Fed President John Williams have both delivered this week.
Two readings
One reading is that the labor market remains tight. Claims below 200,000 and the slowest layoff announcements in four years show employers hoarding workers, which supports wages and spending and keeps pressure on the Fed.
A second reading is that a forecast of 84,000 jobs in a growing economy points to a hiring plateau. Low firing can coexist with weak job creation for a long stretch, and continuing claims above 1.7 million suggest people who lose jobs are not finding new ones quickly.
Friday morning
The Labor Department releases September payrolls at 8:30 a.m. Eastern. Beyond the headline count, average hourly earnings will show whether tight retention is lifting pay, and the unemployment rate against 4.1% will show whether slow hiring is starting to leave people without work.