Latest US Labor Department Data Shows Lower Than Expected Unemployment Benefit Claims
The most recent data released by the US Labor Department on Thursday, December 7, revealed that the number of individuals continuing to receive unemployment benefits was much lower than anticipated. This marks the biggest drop in a month since July and came in below market expectations. Some analysts have pointed out that the holiday season can bring significant fluctuations in the number of initial unemployment benefit claims, making it challenging to obtain accurate market signals.
Unemployment Benefit Claims Summary:
- Adjusted number of people claiming unemployment benefits in the United States: 220,000 (below market expectations of 222,000)
- Four-week moving average: 220,750 people
- Adjusted number of people still receiving unemployment benefits in the United States: 1.861 million (a significant drop of 64,000 from the previous figure)
- Four-week moving average: 1.87225 million
Despite the lower-than-expected unemployment benefit claims, the job market is showing signs of slowing down. The recently released JOLTS job vacancies report from the US Department of Labor indicates a decrease in job vacancies, with a ratio of 1.34 vacancies per unemployed person in October, the lowest level since August 2021. This slowing trend is also evident in the data released by consulting firm Challenger, Gray & Christmas, showing an increase in layoffs by US employers in November.
Analysts are noting that the easing of labor market conditions, combined with falling inflation, has led financial markets to speculate that the Federal Reserve (Fed) may have completed its current interest rate hike cycle. As a result, there are predictions in the financial markets that the Fed may cut interest rates as early as the first quarter of next year.
Goldman Sachs economists have estimated that seasonal distortions could account for a significant increase in jobless claims since early September, and they predict this number will continue to rise in the coming months. Chief economist Lou Crandall at Wrightson ICAP in New York believes that the job market may be softer than recent jobless claims suggest, but also anticipates that future revisions will smooth out the current surge in sustained claims since Labor Day.
Expectations for the Federal Reserve
The Fed is expected to keep interest rates unchanged at its upcoming meeting on Wednesday, December 13. Following a series of rate hikes earlier in the year, financial markets are closely monitoring the Fed’s decisions regarding future interest rate adjustments.
The latest data released by the US Labor Department on Thursday (7th) showed that the number of people continuing to receive unemployment benefits last week was much lower than expected, marking the biggest drop in a month July. unemployment benefits were also below market expectations. Some analysts noted that because of holidays, the number of initial unemployment benefits fluctuates widely at this time of year, making it difficult to get accurate market signals.
The number of people claiming unemployment benefits in the United States last week was lower than expected, but it increased from the previous value. (Photo: ZeroHedge)
In the week ending December 2, the adjusted number of people claiming unemployment benefits in the United States was 220,000, below market expectations of 222,000, but above the previous revised value of 219,000, and’ the four-week moving average was 220,750 people. .
As of the week of November 25, the adjusted number of people still receiving unemployment benefits in the United States was 1.861 million, a significant drop of 64,000 from the revised previous figure of 1.925 million, which is well below expectations’ r market of 1.91 million, which reported the four-week moving average of 1.87225 million.
Top: Trend chart of the number of initial recipients, Bottom: Trend chart of the number of continuing recipients (Photo: US Department of Labor)
Nevertheless, the job market is slowing, and the recently released JOLTS job vacancies report from the US Department of Labor shows that there were 1.34 vacancies per unemployed person in October, the lowest level since August 2021. Although job creation remains largely healthy, employers are increasingly stopping hiring, unemployment is rising and wage growth is losing steam.
On the other hand, consulting firm Challenger, Gray & Christmas released data on the same day showing that US employers laid off 45,510 workers in November, which was lower than the same period last year but an increase of 24 % since October. a sign of a cooling labor market.
Andrew Challenger, the company’s senior vice president, said in a statement that the job market is cooling and employers are not hiring as quickly. The labor market appears to be stabilizing, with more normal fluctuations, but the redundancies are expected to continue next year.
Analysts pointed out that the easing of labor market conditions, combined with falling inflation, had led financial markets to conclude that the Federal Reserve (Fed) may have ended their current interest rate hike cycle . According to CME Group’s FedWatch Tool, financial markets are predicting that the Fed will cut interest rates as soon as the first quarter of next year.
The Fed is expected to keep interest rates unchanged next Wednesday (13th). Since March 2022, the Fed has raised its policy rate by 525 basis points to the current range of 5.25%-5.50%.
Expert opinion
Goldman Sachs economists estimate that seasonal distortions account for at least 269,000 of the increase in jobless claims since early September, and predict that this number will increase by another 125,000 by March next year.
Lou Crandall, chief economist at Wrightson ICAP in New York, believes the jobs market is a bit softer than recent jobless claims suggest, but the 15% surge in sustained claims since Labor Day has ‘to overstate enormously. , will be smoothed out in future revisions.
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