US jobless claims drop well below estimates easing labour market fears

Initial claims for unemployment benefits in the United States dropped unexpectedly last week, offering some relief to concerns about labour market weakness.

The Labour Department reported 218,000 seasonally adjusted filings for the week ending September 20, down 14,000 from the prior week’s upwardly revised figure and below the Dow Jones consensus estimate of 235,000.

Continuing claims, which measure the number of people still receiving benefits, were largely unchanged, slipping by 2,000 to 1.926 million. The figures indicate that despite softer hiring trends and slowing

payroll growth, companies remain reluctant to part with existing workers.

The release comes just days after the Federal Reserve delivered its first interest rate cut of 2026, trimming the benchmark borrowing rate by a quarter point to a range of 4%-4.25%. In its September 17 policy statement, the Federal Open Market Committee cautioned that “downside risks to employment have risen.”

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Non-farm payrolls have indeed slowed to near-stagnant levels, while job openings are at multi-year lows, fuelling concerns that the labour market may be losing steam. However, the latest claims data suggests resilience, highlighting that layoffs remain relatively subdued even as hiring appetite wanes.

The figures could help temper immediate concerns at the Fed, though policymakers are likely to remain watchful of incoming data as they balance inflation risks against the potential for further softening in employment.