LIVE MARKETS-Jobless claims, Challenger layoffs, labor costs/productivity: Your move, October jobs report

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JOBLESS CLAIMS, CHALLENGER LAYOFFS, LABOR COSTS/PRODUCTIVITY: YOUR MOVE, OCTOBER JOBS REPORT

On Thursday, three labor market indicators provided hors d'oeuvres ahead of the main course, Friday's October employment report.

First, 189,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI last week, the lowest reading since July — which marked a 57-year low — and a 3.1% decrease from the prior week.

The number landed 7,000 shy of analyst expectations.

Ironing out weekly volatility, the four-week moving average of initial claims continues to move sideways, with a slight downward bias.

The downtick appears to agree with Tuesday's JOLTS release, which showed employers are firing fewer workers.

On that subject, outplacement firm Challenger, Gray & Christmas (CGC) USCHAL=ECI reports that U.S. firms announced 43,994 layoffs in October.

While that amounts to a 2% monthly increase, it's down 71% from October 2025 and marks the lowest reading for the month since 2023.

There have been a total of 617,189 layoffs announced so far in 2026, down 44% from last year's January-to-October period, which was skewed by DOGE firings.

"This is a low-fire environment," writes Andy Challenger, CGC's workplace expert. "Employers are holding on to the workers they have heading into the holidays, and the hiring they are announcing is largely short-term, seasonal work."

"Companies want the flexibility to meet holiday demand without adding permanent headcount."

Market/economic conditions was the top reason provided for headcount reduction, overtaking AI for the leading cause of job cuts this year. Year-do-date, AI can be blamed for 121,401 layoffs, representing 19.7% of the total.

So far this year, jobs in the technology sector are most often in the crosshairs, responsible for 27.8% of all layoffs. Transportation, food, healthcare and services round out the top five.

"The jobless claims data have been telling the same story of a stable labor market for some time now. Initial claims remain at low levels consistent with few layoffs, while continued claims are trending lower despite a still low rate of hiring," says Nancy Vanden Houten, lead economist at Oxford Economics.

Continuing jobless claims USJOBN=ECI reported on a one-week lag, increased by 1.4% to 1.718 million, 8,000 north of consensus.

But while ongoing claims have been on a downward trajectory for about a year, jobs confidence has been sliding for nearly twice that long.

Back to the Challenger report: so far this year, hiring plans have increased by 34%. But hiring plans and actual hiring are two different things. The NFIB survey continues to identify lack of qualified workers/unfilled positions as the most pressing problem faced by small businesses.

Finally, the Labor Department added the cherry on the cake with its preliminary take on third-quarter labor costs and productivity.

In the July-September period, unit labor costs USLCP=ECI — which gauge the average cost of labor per unit of output produced — unexpectedly fell by 0.7% at a quarterly annualized rate, defying the 0.6% growth predicted by economists and marking a sharp reversal from Q2's 1.9% increase.

Productivity USPROP=ECI — which measures average output per hour — surged 3.6%, breezing past the 2.8% consensus and acceleration from Q2's 2.1% growth rate.

"Quarterly productivity growth remains volatile but the rebound after the relative slump in recent quarters shows the strong story remains intact,” says Oren Klachkin, financial markets economist at Nationwide. “Maybe AI is contributing to this, but our view is only on the margin. It’s more the result of businesses consistently looking for ways to do more with less to squeeze out efficiency gains and keep costs down."

All of the above is prologue to the Labor Department's employment report due tomorrow, which is expected to show the U.S. economy added 65,000 jobs in October, with the unemployment rate standing firm at 4.2%.

(Stephen Culp)

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