Tags: shutdown | unemployment claims | labor department | federal reserve

US Jobless Claims Rise Amid Government Shutdown

Friday, 10 October 2025 06:10 PM EDT

The number of Americans filing new applications for unemployment benefits increased again last week, economists estimated on Thursday, hinting at some early layoffs of contractors related to the government shutdown.

Initial claims for state unemployment benefits rose to a seasonally adjusted 235,000 for the week ending Oct. 4 from 224,000 the prior week, economists at JPMorgan and Goldman Sachs calculated. They made assumptions for Hawaii and Massachusetts, whose data was unavailable.

Citigroup estimated 234,000 claims last week.

Official economic data collection and publication has been suspended because of the government shutdown, now in its second week.

States have continued to collect unemployment claims data and submit it to the Labor Department's database, which remains accessible.

The shutdown following a lapse in funding has delayed the release of the closely watched employment report for September, crucial for decision-making by the Federal Reserve, businesses, and households.

"The increase could be due to government contractors filing for unemployment benefits while temporarily laid off as the government is shut down," said Gisela Young, an economist at Citigroup.

"Initial claims also increased during October 2013, the last full government shutdown. We would expect claims to either increase further or stay elevated next week too."

The shutdown has sent hundreds of thousands of federal workers home, with spillover effects to contractors, thousands of whom have been furloughed.

Economists also expected a separate unemployment claims program for federal workers to show a rise in applications. Despite last week's increase, initial claims remained within their recent range.

Claims Still 'Reasonably' Low

"Excluding any shutdown noise, claims still look reasonably low," said Abiel Reinhart, an economist at JPMorgan.

"Once the government reopens, claims should quickly reverse any shutdown-related increase."

The labor market has been stuck in a "no firing" and "no hiring" mode, with economists saying U.S. trade and immigration policies and the growing popularity of artificial intelligence have reduced demand and labor supply.

Minutes of the U.S. central bank's Sept. 16-17 policy meeting published on Wednesday showed Fed officials described their outlook for the labor market as "uncertain and viewed downside risks to employment as having increased over the intermeeting period."

The Fed resumed cutting interest rates last month to support the labor market.

Lackluster hiring has left many people who lose their jobs experiencing long bouts of unemployment and drawing unemployment checks for some time.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased to a seasonally adjusted 1.927 million during the week ending Sept. 27, from 1.919 million in the prior week, JPMorgan estimated.

Goldman Sachs calculated the so-called continuing claims rose to 1.924 million in the last week of September. 

© 2025 Thomson/Reuters. All rights reserved.


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The number of Americans filing new applications for unemployment benefits increased again last week, economists estimated on Thursday, hinting at some early layoffs of contractors related to the government shutdown.
shutdown, unemployment claims, labor department, federal reserve
443
2025-10-10
Friday, 10 October 2025 06:10 PM
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