The number of Americans filing new claims for jobless benefits fell last week, but layoffs increased from a 24-year low in September in part as hospitals fired unvaccinated staff and lack of workers forced closures.
Initial claims for state unemployment benefits decreased 38,000 to a seasonally adjusted 326,000 for the week ended October 2, the Labor Department said today.
Economists polled by Reuters had forecast 348,000 applications for the latest week.
Claims had increased for three weeks in a row as California moved people to another programme following the expiration of federal government-funded aid on September 6 to maximize their access to unemployment benefits.
The transfer, which allowed recipients to collect one additional week of benefits, boosted applications, even though it reflected an existing claimant moving from one programme to another.
Away from California, there were increases in claims related to the idling of assembly plants in some states by some automakers as they try to manage their supply of semiconductors amid a global shortage.
A resurgence in Covid-19 infections, driven by the Delta variant, also disrupted activity in the high-contact services sector.
That suggested some moderation in labour market conditions.
A separate report from global outplacement firm Challenger, Gray & Christmas showed job cuts announced by US-based employers increased 14% to 17,895 in September. But layoffs were still down 85% compared to September 2020.
In the third quarter, employers announced 52,560 job cuts, the fewest since the second quarter of 1997 and down 23% from the July-September period.
Layoffs last month were led by companies in the healthcare/products sector, with 2,673 announced cuts. Since the Pfizer vaccine received full-FDA approval, many health care facilities have implemented vaccine mandates.
"Healthcare is facing an enormous talent shortage," said Andrew Challenger, senior vice president at Challenger, Gray & Christmas.
"Other systems are facing walk-outs or firings of unvaccinated staff, further broadening the worker shortage. In some cases, a lack of staff leads to the closing of entire units causing involuntary job loss."
Ongoing strains in the supply chain are hurting the labour market. Industrial goods manufacturers announced 2,328 layoffs in September, while warehousing businesses planned 1,936 job cuts. There were 1,679 job cuts announced in the services sector.
But the rise in layoffs was dwarfed by an explosion in planned hiring, in part as retailers gear up for the Thanksgiving and Christmas holiday season. The Challenger report showed companies announced plans to hire 939,790 workers compared to only 94,004 in August.
That bodes well for September's employment report due on Friday. According to a Reuters survey of economists, nonfarm payrolls likely rose by 500,000 jobs last month.
Estimates range from as high as 700,000 jobs to as low as 250,000. The economy created 235,000 jobs in August, the fewest in seven months.
The unemployment rate is forecast dipping to 5.1% from 5.2% in August. But labour market indicators were mixed in September.
A survey from the Conference Board last week showed consumers' views of current labor market conditions softened.
The Institute for Supply Management's measure of manufacturing employment rebounded last month after contracting in August. But the ISM's gauge of services industry employment slipped, with businesses reporting that "labor shortages (were) experienced at all levels."
The pandemic forced some people to drop out of work to become caregivers. Others are reluctant to return for fear of contracting the coronavirus, while some have either retired or are seeking career changes. There were a record 10.9 million job openings at the end of July.
Economists are cautiously optimistic that the labour shortage will start easing in the autumn and during winter after last month's expiration of the expanded unemployment benefits.
They will also be keeping an eye on vaccine mandates amid reports that thousands of workers could be fired for refusing to get inoculated. President Joe Biden last month announced new rules requiring vaccination at many private workplaces.