Thursday’s report from the Labor Department indicates ongoing strength in the labor market, with applications for initial jobless claims falling unexpectedly. While hiring has slowed considerably, layoffs remain low in a tight labor market. Initial jobless claims dropped to 212,000 for the week ended October 19, below expectations of 215,000.
- Initial jobless claims came in at 212,000 vs. 215,000 expected, with no states estimated last week.
- Data for the week prior was revised upward to 218,000.
- The four-week average of claims dropped 750 to 215,000 last week.
The labor market remains robust with low layoffs despite worsening economic conditions and a hiring slowdown. Companies may be retaining employees despite recessionary pressure due to a shortage of skilled workers which would make rehiring difficult later on. The four-week average of initial jobless claims, a more stable indicator that irons out volatility, dropped 750 to 215,000 last week. The number of Americans applying for benefits after an initial week of aid dropped 1,000 to 1.682 million for the week ended October 12. The four-week average of these continuing claims rose 6,500 to 1.677 million.
Claims have dropped even in the face of an ongoing strike at General Motors. Although striking workers cannot apply for benefits, the strike’s wider impact on supply chains has likely resulting in workers in related fields making initial claims as the strike unfolds. The United Auto Workers Union has made a preliminary agreement with General Motors as of last week, but will remain on strike until Friday pending a vote on the proposal.
Jobless claims edged lower to 212,000, just below the 4-week average of 215,000. Insured unemployment remains at 1.2% with only a 1,000 drop in absolute terms. The indicator remains muted with no large deviations in some time. https://t.co/BnKCM8bE5q pic.twitter.com/4q1cKg1faL
— MTS Insights (@MTSInsights) October 24, 2019
The labor market continues to support other areas of the economy struggling under a global economic slowdown and a trade war which has seriously impacted manufacturing and business spending. Analysts are watching for any sign that recessionary pressure has spilled over into the labor market, as this would disrupt consumer spending and the broader economy. However, to date the market remains in good health, and the US economy tentatively continues its record-breaking period of economic expansion which now stands at over a decade.
Gold prices have spiked following the joint release of economic reports indicating lower jobless claims but a drop in business spending plans as well. Spot gold last traded at $1,499.15/oz, up 0.43% with a high of $1,501.04/oz and a low of $1,488.38/oz.