US Jobless Claims at 197,000 as September Layoffs Fall 18%

Initial claims for US state unemployment benefits slipped 1,000 to a seasonally adjusted 197,000 in the week ended September 26, the Labor Department reported on Thursday, October 1 — 3,000 below the 200,000 that economists polled by Reuters had forecast. Claims now sit near 57-year lows.

The reading landed despite mounting headwinds from the US-Israeli war with Iran, which is pushing up energy prices; diesel prices are at record highs. Economists credit robust corporate profit growth and resilient domestic demand with shielding workers from layoffs.

A separate report from the outplacement firm Challenger, Gray & Christmas reinforces the picture of a labour market that is stable but frozen. Planned layoffs at US-based employers dropped 18 percent to 43,281 in September, and announced job cuts were down 20 percent from a year earlier. The cumulative picture is even stronger: employers have announced 573,195 layoffs so far this year, down 39 percent against the first nine months of 2025, while planned job cuts fell 43 percent in the third quarter alone.

Hiring plans tell a different story

Job security is holding up. Job openings are not.

Challenger-recorded hiring plans rose to 90,787 in September, a sharp jump from 12,325 in August — but still down 23 percent from a year ago, and the lowest tally for any September since 2011. The firm noted that the surge in seasonal hiring that normally begins in September simply did not appear.

"Companies are in a wait-and-see period right now," said Andy Challenger, chief revenue officer at Challenger, Gray & Christmas. "Employers are facing high energy costs, an uncertain war in Iran, a rate hike that could make hiring more expensive, plus the likelihood of surging healthcare costs."

That rate hike is real. The Federal Reserve last month raised its overnight benchmark rate by 25 basis points to a range of 3.75 to 4 percent — the first increase in three years — and signalled further rises in borrowing costs ahead.

For an individual worker, the practical read is this: the odds of losing a job this quarter are materially lower than a year ago, but the odds of finding a new one quickly have deteriorated. Continuing claims — the number of people receiving benefits after an initial week of aid, a proxy for hiring — fell 11,000 to a seasonally adjusted 1.701 million in the week ended September 19, near the lower end of this year's range. Yet some people who have lost jobs are experiencing long spells of unemployment, a sign that re-entry into the market is slow.

What consumers and forecasters expect

Consumer sentiment tracks that split. A Conference Board survey released Tuesday showed the share of consumers saying jobs were "plentiful" fell in September to its lowest level since February 2021, while the proportion viewing jobs as "hard to get" hit its highest in more than five and a half years.

One technical note: the weekly claims data fall outside the survey window and have no bearing on September's employment report. A Reuters survey of economists puts non-farm payrolls growth at 90,000 for last month, after August's 162,000 gain, with the unemployment rate forecast to hold at 4.1 percent for a third straight month — though risks are tilted to the upside.

If hiring intentions remain at their weakest September level since 2011 while layoffs keep falling, the months ahead favour those already employed over those actively searching.