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- Initial jobless claims fell to 194,000 last week, a sixth straight week at or below 200,000 and close to the lowest level in more than five decades.
- Housing starts and pending sales weakened in September, but residential construction is a small share of economic output, and business investment and consumer spending continue to support growth.
- Business activity growth eased in October but stayed close to a five-year high, while selling prices rose at their fastest pace since August 2022.
1. Jobless Claims Hold Near Multi-Decade Lows as Layoffs Stay Limited
Initial claims for state unemployment benefits fell by 6,000 to a seasonally adjusted 194,000 for the week ending October 17th.1 Claims have now been at or below 200,000 for six straight weeks.1 The reading sits close to the 189,000 level recorded in mid-July, which was the lowest since 1969.1
Low filings say more about layoffs than about hiring, and layoffs remain limited. Continuing claims, which count people still receiving benefits after an initial week of aid and are reported with a one-week lag, rose by 25,000 to 1.728 million for the week ending October 10th.1 That level remains historically low, but the rise, together with longer unemployment spells, suggests that people who lose jobs are taking longer to find new ones.
Last week’s report included the reference week that provides a snapshot for the October employer survey. The four-week moving average of claims declined between the September and October survey weeks, which may point to a modest pickup in October hiring after September’s softer result.1
Payrolls rose by 29,000 in September following a gain of 133,000 in August, while the unemployment rate stood at 4.2%.2 The median duration of unemployment was 11.5 weeks, close to its highest level in roughly four and a half years.2
2. Housing Softens While Broader Activity Holds Up
Residential construction lost ground in September. Privately owned housing starts fell to a seasonally adjusted annual rate of 1.22 million.3 Building permits, which lead construction activity, were little changed at roughly 1.4 million, though single-family permits fell 4.0%.3
Demand measures were weaker still. The National Association of Realtors Pending Home Sales Index, which tracks signed contracts on existing homes and dates to 2001, fell to a record low of 66.0 in September.4 Mortgage rates above 7% on a 30-year fixed loan continue to limit affordability.5
Housing carries less weight in the overall economy than its visibility suggests. Residential investment accounted for roughly 4% of gross domestic product in 2025, and it expanded in the second quarter after five consecutive quarterly declines.6
Other categories have held up. Real final sales to private domestic purchasers, a measure of consumer spending and private fixed investment, posted their strongest quarterly gain in more than two years in the second quarter.6 Manufacturing has also held up, with the ISM Manufacturing PMI in expansion territory in September.7
3. Business Activity Stays Strong While Price Pressures Build
Private survey data pointed to continued expansion in October, at a slightly slower pace. The flash composite output index came in at 57.6, down from 58.4 in September and a two-month low, but still well above the 50 mark that separates growth from contraction.8 Services eased to 57.9 from 58.8. Factory output growth also eased, though the broader manufacturing PMI, which also tracks orders, hiring and delivery times, edged up to 56.0 from 55.9, the highest in 53 months.8
Demand held firm. New orders grew at the strongest pace in more than four and a half years, and export orders posted their largest gain since May 2022.8 Rising backlogs of work pushed firms to add staff in October, and employment increased at its second-fastest rate since June 2022, behind only September.8
Costs were the less encouraging aspect of the report. Selling prices rose at the sharpest rate since August 2022 as companies passed higher expenses on to customers.8 Firms pointed to oil-based inputs, energy, fuel and freight, along with steel, aluminum and copper, where tariffs and shortages added to prices.8 Supplier delivery times lengthened the most since 2022.8 Growth is holding up, and we believe the economy remains on solid footing, though the pickup in costs is worth watching.
Looking Ahead
- Federal Reserve Interest Rate Decision – Wednesday, October 28th
- Third Quarter GDP, Advance Estimate – Thursday, October 29th
- Employment Cost Index – Friday, October 30th
Why It Matters
Three releases will shape the week. The Federal Reserve concludes its policy meeting Wednesday. The target range for the federal funds rate stands at 3.75% to 4.00% following September’s quarter-point increase, and most officials projected at least one more increase by year-end.9 The accompanying statement and press conference are likely to carry more weight than the decision itself, since they offer the clearest read on how officials are weighing price pressures against employment conditions. On Thursday, the Bureau of Economic Analysis publishes its first estimate of third-quarter growth, measured against the 2.2% annualized pace recorded in the second quarter.6 That release will show whether the resilience in consumer spending and business investment described above carried through the summer. Friday brings the third-quarter Employment Cost Index; the prior reading showed a 0.9% quarterly increase.10 Compensation costs matter because they connect the two themes running through this week’s data: a labor market that keeps workers employed and an inflation picture that depends in part on what those workers are paid.
For the period ending 10/23/26.
*Small-cap stocks are represented by the Russell 2000® Index. International stocks are represented by the MSCI EAFE. Bonds are represented by the Bloomberg US Aggregate Bond Index. Oil is represented by WTI Oil (West Texas Intermediate Oil), a benchmark for light, sweet crude oil and a primary measure for pricing oil contracts and futures in the U.S.
Sources
1 U.S. Department of Labor, Employment and Training Administration, Unemployment Insurance Weekly Claims News Release, October 22, 2026
2 U.S. Bureau of Labor Statistics, The Employment Situation, September 2026
3 U.S. Census Bureau and U.S. Department of Housing and Urban Development, New Residential Construction, September 2026
4 National Association of Realtors, Pending Home Sales Index, September 2026
5 Freddie Mac, Primary Mortgage Market Survey, October 2026
6 U.S. Bureau of Economic Analysis, Gross Domestic Product (Third Estimate), Second Quarter 2026
7 Institute for Supply Management, Manufacturing PMI Report on Business, September 2026
8 S&P Global Market Intelligence, Flash US PMI News Release, October 23, 2026
9 Federal Reserve Board of Governors, FOMC Statement and Summary of Economic Projections, September 16, 2026
10 U.S. Bureau of Labor Statistics, Employment Cost Index, Second Quarter 2026
Disclosures
Disclosures
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We undertake no duty or obligation to publicly update or revise the information contained in these materials. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. You should not view the past performance of securities, or information about the market, as indicative of future results.
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Additional Disclosures: International and Foreign Securities, Fixed Income Investments, the Consumer Price Index, the Producer Price Index
Comparative Index Descriptions: The Standard & Poor’s (S&P) 500 Index, The Russell 2000® Index, The NASDAQ Composite Index, The MSCI EAFE Index, Dow Jones Industrial Average® (Dow Jones or DJIA), The Bloomberg Barclays US Aggregate Bond Index (US Agg Bond), The CBOE Volatility Index (VIX). CSP2026001_43
