Unemployment benefit filings in the United States fell, last week, to their lowest since September, signaling a potentially tight labor market. More importantly, though, these numbers keep unemployment at a near-five-decade low; and some economists even think we have evidence of some cooling.
Looking more closely at the numbers US jobless games fell to 206,000 for the week ending December 8. This Labor Department number is actually more astounding when you consider that Bloomberg economists said the median estimate would probably be higher, at 226,000. Of course, the four-week average is more reliable as it is not as volatile a measure; this average suggested the numbers would fall to 224,750.
Despite the obvious disparity, the decline is actually pretty consistent with the direction of the labor market, which remains quite healthy even without adding as many jobs in November as was first anticipated. And not only is the unemployment rate at its lowest mark since 1969, but job openings also appear to be nearing a record.
This is all quite important because unemployment claims had just shot up to an eight-month high of 235,000 only a few weeks ago! Some argue that this dramatic size of this drop is not actually an indication of cooling, but suggests, rather, lower-than-expected job growth. For example, nonfarm payrolls only increased by 155,000 in November which did not meet analyst expectations.
At the same time, it is very important to keep in mind that analysts caution the holidays to make it more difficult to accurately engage volatility. While the numbers certainly do not lie, the chaos of the season makes it harder to identify the underlying trends that support the jobless claims. Still, the numbers suggest a strong movement towards conditions that definitely support an improved labor market.
On another—but certainly related—note, the US central bank is expected to raise interest rates this week (at the December 18/19 policy meeting). The Fed has already issued three interest rate hikes this year and economists expect another borrowing cost increases next year. Traders, on the other hand, only expect the Fed will issue one interest rate hike next year.