The number of Americans making first-time claims for unemployment benefits declined by 3,000 last week to 201,000, according to updated data from the Bureau of Labor Statistics (BLS). That was much better than expected, the lowest weekly total since 1969, and the 185th consecutive sub-300K reading. The less volatile 4-week average for initial jobless claims also fell to a nearly half-century low, which further highlights the tight labor market in the United States with employers that are reluctant to let workers go.
We could see a temporary jump in claims next week due to disruptions in economic activity caused by hurricane Florence in the Carolinas. Overall, though, the trend remains lower for first-time claims, which suggests that when the September nonfarm payrolls report is released it should show another healthy hiring gain. That would only make it easier for officials at the Federal Reserve to justify additional interest rate hikes this year. However, considering that the current labor force is much larger now than it was the last time initial claims were this low, this could be about “as good as it gets” for this leading economic indicator. Moreover, it will be worth monitoring weekly jobless claims going forward since this metric tends to head sharply higher ahead of a recession.
Sources: Econoday, U.S. DoL, Bloomberg, FRBSL
Post author: Charles Couch