Labor Market Hiccups as Inflation Concerns Persist

The U.S. labor market experienced slight rises in unemployment applications due to hurricanes and strikes. While employment growth slowed, unit labor costs increased, casting doubts on the Federal Reserve's inflation targets. Economists suggest a rebound in November as disruptions diminish, but inflation remains a significant concern.

The number of Americans applying for unemployment benefits saw a modest increase last week, indicating minimal shifts in the labor market. This trend reinforces beliefs that hurricanes and strikes have nearly stalled job growth in October, with wage pressures remaining steady, potentially impacting inflation and interest rates.

Labor costs rose significantly in the third quarter, suggesting challenges in maintaining the Federal Reserve's 2% inflation target. This comes alongside predictions of a 25 basis point cut in interest rates by the central bank, which would adjust policy rates to the 4.50%-4.75% range.

Unemployment claims reflected regional disruptions, rising notably in states like California and Michigan, driven by both natural disasters and industrial strikes. Despite the disruptions, economists forecast a potential improvement in job growth as these factors subside, bringing inflation back into focus.

(With inputs from agencies.)