Initial claims for state unemployment benefits fell 2K to a seasonally adjusted 197K for the week ended Oct. 3, the Labor Department said Thursday.
Economists polled by Reuters had expected 200K. Claims have now held near 57-year lows for four straight weeks.
The strength sits awkwardly next to hiring data, with nonfarm payrolls up just 29K jobs in September.
Economists describe the result as a low-hire, low-fire labor market, where companies hang onto the staff they have and stay reluctant to add more.
Layoffs are rare, but new jobs are harder to find
Continuing claims, which count people still collecting benefits after their first week, rose to 1.716M for the week ended Sept. 26, above the 1.710M expected and up from 1.699M.
The steady upward drift is read as a leading indicator of labor market slack, since it signals the unemployed are taking longer to land new roles.
Analysts flag that persistent trend, rather than week-to-week noise, as the signal worth watching for Fed policy.
Tepid hiring also reflects a shrinking labor pool, with retirements and an immigration crackdown pulling workers out of the market.
Employers are hoarding staff against a backdrop of strong profit growth, yet still hesitant to expand headcount.
Waller cools expectations for an October hike
Fed Governor Christopher Waller used a speech in Istanbul to signal flexibility on the timing of the next rate increase.
Market odds of an October hike dropped to 20% after the remarks. Waller still backs further hikes to get inflation to the 2% target, but sees no urgency right now.
He pointed to the war with Iran and the cost of the artificial intelligence buildout as forces keeping inflation stubbornly elevated.
The central bank raised rates in September to a 3.75% to 4.00% range, and other officials have echoed a more cautious path from here.
Layoffs near historic lows argue against recession, while near-frozen hiring and rising continuing claims argue against a booming economy.
Rate decisions through year-end could hinge on whether inflation cools, not on whether the job market cracks.
The next few claims reports will show whether 197K marks a floor or a pause.
