US Initial Jobless Claims Under 300,000 for 81st Week

Last week the number of Americans who filed for unemployment benefits dropped to a 2 month low, hinting at the labor market’s growing strength that could cause the Federal Reserve to raise their interest rates by December. The uptick shown by the US initial jobless claims data came just a day after the US central bank decided against an interest rate raise but showed strong signs that it could increase borrowing costs before the end of the year, as they cited the progressive growth in the labor market and a strong rally in economic growth.

The Labor Department also revealed today that initial claims for state unemployment benefits experienced a fall of 8,000 to a seasonally adjusted 252,000 for the week ending on September 17, this is the lowest level reported since mid-July. Claims for the previous week were unrevised. This makes 81 straight weeks that claims have stayed below the 300,000 level, which signifies a booming labor market environment. This is also the longest streak since 1970 when the labor market had not yet expanded.

The four-week average of claims, a less-volatile measure than the weekly figure, dropped to 258,500 from 260,750 in the prior week. The number of people continuing to receive jobless benefits declined by 36,000 to 2.11 million in the week ended Sept. 10, the lowest level since May. The unemployment rate among people eligible for benefits fell to 1.5 percent from 1.6 percent. These data are reported with a one-week lag.

“It’s a pretty solid sign,” said Gennadiy Goldberg, an interest-rate strategist at TD Securities LLC in New York. “It reinforces what the Fed has been saying and reinforces their bias toward hiking rates in the near future.”

Estimates in the Bloomberg survey ranged from 255,000 to 270,000. The prior week’s reading was unrevised at 260,000.

In a poll conducted by Reuters, economists had forecasted that there would be a rise to 262,000 for the initial jobless claims data. A Labor Department analyst said, “There were no special factors influencing last week's data and only claims for South Carolina had been estimated”. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,250 to 258,500 last week. Last week's claims data covered the survey period for September's nonfarm payrolls. Payrolls increased by 151,000 jobs in August.

The ICE US Dollar Index is trading lower to 95.16, down by 52 bps after yesterday’s FOMC meeting. The S&P 500 futures are higher by 10 point to 2,166.25. Gold is trading higher by 71 bps on the session to $1,340.9 per ounce, while WTI crude oil futures are trading higher by over 2% to $46.25.