The number of Americans applying for unemployment benefits in the week ended November 2 hit a monthly low and remain near a 5-year low, indicating ongoing strength in the labor market despite recessionary pressures. Initial jobless claims dropped 8,000 to 211,000, according to the Labor Department. The figure is slightly below expectations of 215,000.
- Jobless claims fell 8,000 to 211,000 vs. 215,000 expected.
- The labor market remains at the strongest point in decades, with low layoffs and skilled workers in high demand.
- The drop in Claims was led by California which saw a rise in claims last month following rolling blackouts and widespread fires disrupting the workforce.
Jobless claims, a lead indicator of layoffs, remain low despite contracting business investment and an uncertain climate due to the trade war. While areas like manufacturing are struggling, companies appear to be retaining their workforce due to the tight labor market, as rehiring later would be difficult and more expensive. Hiring has slowed considerably throughout the year, but for the time being, the labor market remains in good health.
Claims fell the most in California, Georgia, and Virginia. California suffered wildfires and rolling blackouts last month, leading to an increase in the number of claims. The largest increase in claims last was in Illinois and Pennsylvania. The monthly average of new claims, a less volatile measure, rose 250 to 215,250. The number of people collecting aid after an initial week of benefits dropped by 3,000 to 1.69 million, near 1970s levels.
— Whetstone Analysis LLC (@AnalysisLlc) November 7, 2019
While the economy has slowed down throughout Q2 and Q3 with reduced GDP figures each quarter, the labor market continues to power the economy and enable strong consumer spending which accounts for the lion’s share of economic activity. The latest non-manufacturing report shows unexpectedly strong performance from the services sector, all of which is allowing the US economy to continue its record-breaking period of expansion which now stands at over a decade. Productivity, however, fell for the first time since 2015 yesterday, making it unclear how stable the economy is in the face of the ongoing economic slowdown seen worldwide.
Gold prices have fallen following the news. Spot gold last traded at $1,484.93/oz, down -0.35% with a high of $1,492.50/oz and a low of $1,481.45/oz. Gold prices are continuing a downward trend seen earlier in the week which was sparked by the strong non-manufacturing report.