US Jobless Claims Drop to Lowest Since July as Productivity Surges and Labor Costs Fall

The US labor market showed unexpected strength in the week ending October 31, with initial jobless claims falling 6,000 to 189,000, the lowest level since July. The print came in well below the consensus forecast of 196,000-197,000 and the prior week's upwardly revised reading of 195,000. Continuing claims for the week ending October 24 rose 23,000 to 1.718 million, slightly above the forecast of 1.710 million, though the prior week was also revised lower to 1.695 million.

Separate data released at the same time showed a sharp improvement in worker productivity and a surprise decline in labor costs. Preliminary third-quarter productivity came in at 3.6%, well above the 2.7% forecast and more than double the prior reading of 1.4%. Unit labor costs fell 0.7% on a preliminary basis, a dramatic reversal from the prior 1.2% gain and far below the 0.4% increase that economists had expected. Together, those figures point to a labor market that is adding output efficiently without generating wage-driven inflation pressure.