US labour market surprises with lower jobless claims
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The news: The number of new US unemployment benefit claims fell by a larger-than-expected 17,000 in the week ending August 3, to 233,000, according to the Labor Department.
The numbers: The drop follows a sharp increase in jobless claims the previous week that triggered the start of a decline in investor sentiment last Thursday.
The lower number was below the expected 240,000 claims forecasted by economists polled by The Wall Street Journal, and represented the largest decline in nearly a year. It was partly driven by fewer claims in states like Michigan, Missouri and Texas.
The S&P 500 Index was almost 2% higher in the first hour of trading and the 10-year yield hit 4%, up from 3.968% on Wednesday
The context: The decrease may ease concerns about a rapid deterioration in the US labour market, with fears escalating last Friday due to a disappointing jobs report showing reduced hiring and a rising unemployment rate.
Despite the positive news, concerns persist about potential economic slowing and its impact on Federal Reserve policy. The four-week moving average of claims rose to 240,750, the highest in a year
What they said: “The data bear watching for signals about a more material weakening in the labor market going forward, which would have implications for Fed policy,” Carl Weinberg and Rubeela Farooqi of High Frequency Economics said in a note cited by Bloomberg. “They signal modest economic slowing, not contraction!”
The sources: US Department of Labor , Bloomberg , Reuters
