US Jobless Claims Hover Near 57-Year Lows as Business Activity Hits Five-Year High

Layoffs are rare, employers are still hiring, and the economy is running hotter than expected — which is exactly why the Fed just raised rates.

September 26, 2026 — New claims for U.S. unemployment benefits fell to 197,000 in the week ended September 19, hovering near 57-year lows and signaling that the American labor market has regained momentum after struggling through much of the summer. The Labor Department report, released Thursday, beat economists' expectations and arrived a day after S&P Global reported that U.S. business activity had surged to its strongest level in more than five years.

Image: A rising economic chart over factories and office buildings. Credit: Red Eye Eagle News / AI-generated illustration.

Editor's Highlight: Two reports, one message: the U.S. economy is firing on all cylinders in mid-September. Jobless claims sit near levels last seen in 1969, and private-sector activity just hit a five-year high. The tension is that this strength is precisely what pushed the Federal Reserve to raise rates — the hotter the economy runs, the more the Fed worries about inflation.

Table of Contents

• Editor's Highlight
• Key Facts
• The Claims Report: 197,000 and Falling
• The 1969 Benchmark
• Business Activity's Five-Year High
• The Inflation Counterweight
• What Economists Are Saying
• Bottom Line
• FAQ
• Sources

Key Facts

Detail	Information
Initial jobless claims (week ended Sep 19)	197,000, down 1,000 from the prior week
Economist forecast	201,000 (Reuters poll)
Four-week moving average	202,250, a six-week low
Continuing claims	1.719 million (week ended Sep 12)
Historical context	Near 57-year lows; levels last seen in 1969
S&P Global flash composite PMI (September)	58.4, up from 56.0 — highest since July 2021
Expected September unemployment rate	4.1%

The Claims Report: 197,000 and Falling

The Labor Department said Thursday that initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 197,000 for the week ended September 19. Economists polled by Reuters had forecast 201,000 — meaning the actual figure came in well below expectations.

The four-week moving average, which smooths out week-to-week volatility, also dipped to 202,250 — a decrease of 1,750 and its lowest level in six weeks. The number of people continuing to collect unemployment benefits stood at 1.719 million for the week ended September 12, near three-year lows.

Jobless claims are one of the most timely proxies for layoffs, and economists watch them closely as a real-time signal of where the job market is headed. So far in 2026, claims have mostly stayed below 220,000 — historically low territory by any measure.

Newsroom Focus: Watch the September jobs report, due next week. Forecasters surveyed by FactSet expect employers added about 52,500 jobs with unemployment holding at 4.1% — the claims data suggests the report has room to surprise to the upside.

The 1969 Benchmark

Put the 197,000 figure in perspective: claims are now near levels last seen in 1969, when the U.S. workforce was dramatically smaller and the economy looked nothing like today's. Fewer people applied for unemployment benefits last week than at almost any point in the past 57 years.

Associated Press analysis of the report noted that the American job market has remained sturdy despite higher energy prices that have squeezed businesses and consumers since the U.S.-Israeli conflict with Iran began on February 28. Employers — companies, government agencies, and nonprofits — have been adding an average of about 80,000 jobs a month this year, including a surprising 162,000 in August.

That's a marked improvement on a dismal 2025, when monthly job creation averaged just 9,700 as high interest rates and trade-policy uncertainty discouraged hiring. The layoff rate, meanwhile, stays low — businesses that lived through the post-pandemic labor shortages are reluctant to let go of staff even as they hire more modestly than in recent years.

Analysis Note: Some economists caution about seasonal adjustment noise — difficulties adjusting the data around the moving Labor Day holiday and "residual seasonality" that tends to push claims lower late in the year. The underlying trend, though, remains consistent with a labor market that has regained its footing.

Business Activity's Five-Year High

The claims data landed a day after the other big signal: S&P Global's September flash composite PMI jumped to 58.4 from 56.0 in August — the highest reading since July 2021 and well above the 50 threshold that separates expansion from contraction.

The survey pointed to faster hiring across the private sector and broad-based strength in both manufacturing and services. It was, by the numbers, the strongest month for U.S. business activity in more than five years.

Taken together, the two reports tell a coherent story: layoffs are rare, hiring is accelerating, and output is expanding briskly. Christopher Rupkey, chief economist at FWDBONDS, captured the mood: "In mid-September the economy seems to be firing on all cylinders in part due to the extraordinary capex expenditures on AI."

The Inflation Counterweight

The same S&P Global survey carried a warning: input costs are rising at the fastest pace since October 2022. The U.S.-Israeli war with Iran has raised energy prices — diesel has hit record highs — and economists say those costs will eventually stoke inflation and restrain economic activity.

That inflation pressure is the other half of the story. The Federal Reserve, under Chair Kevin Warsh, raised its benchmark rate to 3.75%–4% earlier this month — the first rate hike since 2023 — precisely because inflation remains above its 2% target. Long-term Treasury yields are pushing toward 5%, and markets are pricing in the possibility of further hikes.

The housing market offers a mixed snapshot: new-home sales rose 6.4% to a 684,000 annualized rate, helped by price reductions, but the median new-home price fell 5.8% from a year earlier to $393,700, with mortgage rates near 7.03%. Strong economy, expensive money — that tension defines this moment.

Analysis Note: As Rupkey put it, "It is a race against time perhaps as energy prices have kicked up again as the Iran war stretches on and the economy could always suffer through a soft patch in demand." Strength today, headwinds tomorrow.

What Economists Are Saying

The economist consensus is cautiously optimistic. Matthew Martin, senior U.S. economist at Oxford Economics, said the claims data "continue to be consistent with a low pace of layoffs and a labor market that has struck a balance between a low rate of hiring and little growth in the labor force."

Reuters' analysis noted that the report suggested the unemployment rate remained steady at 4.1% this month, with the number of people collecting unemployment checks near three-year lows during the week the government surveyed households for September's jobless rate.

The seasonal-adjustment caveats remain: economists have cited difficulties seasonally adjusting around the Labor Day holiday and residual seasonality effects. Still, the trend across weeks — not any single reading — points to a labor market that is weathering the headwinds from elevated energy costs and geopolitical conflict.

Bottom Line

The U.S. economy in mid-September is running hot: jobless claims near 57-year lows, business activity at a five-year high, hiring accelerating off a dismal 2025. That strength is genuine — but it comes with rising input costs, record diesel prices, and a Fed that just raised rates to cool things down. What to watch: next week's September jobs report and whether the economy's momentum survives the energy-price squeeze.

FAQ

What are jobless claims, and why do they matter?

Initial jobless claims count first-time applications for unemployment benefits and serve as a timely proxy for layoffs. Economists watch them because they signal where the job market is headed, often ahead of the monthly jobs report.

How do current claims compare historically?

The latest reading of 197,000 is near 57-year lows — levels last seen in 1969 — and the lowest since mid-July 2026. So far this year, claims have mostly stayed below 220,000.

What did the S&P Global PMI show?

The September flash composite PMI rose to 58.4 from 56.0, the highest since July 2021, signaling strong expansion in both manufacturing and services — though input costs rose at their fastest pace since October 2022.

Why does a strong economy lead to higher interest rates?

When growth runs hot, inflation pressure builds. The Fed raised its benchmark rate to 3.75%–4% in September — its first hike since 2023 — to keep inflation moving back toward its 2% target.

When is the next big labor-market data?

The Labor Department releases the September jobs report next week. Forecasters expect about 52,500 jobs added and unemployment steady at 4.1%, according to a FactSet survey.

Sources

• SRN News (Reuters wire, by Lucia Mutikani) — "US weekly jobless claims near 57-year lows," Sep 24, 2026
• 990 The Answer (AP, by Paul Wiseman) — "Claims for unemployment benefits drop to 197,000," Sep 24, 2026
• Traders Agency — "US business activity hits more than five-year high," Sep 2026
• MarketDaily — "September flash PMI hits five-year high," Sep 2026