Initial jobless claims fell 3,000 to 216,000 during the week ended February 29, with no indication of increased layoffs despite the ongoing virus outbreak crisis. The Federal Reserve implemented the first emergency rate cut since 2008 on Tuesday due to concerns around the outbreak, but the latest data shows that the impact on the US economy is in the early stages.
- Initial jobless claims dipped 3,000 to 216,000 vs. 217,000 expected according to the Labor Department.
- Claims remain near the 50-year low seen in April 2019 at 193,000, and have stayed in the low 200,000s since then.
- Claims rose the most in New York, California, and Virginia.
Initial jobless claims will fall under increasingly heavy scrutiny as a measure of layoffs in the coming weeks and months, as market analysts seek to measure the effect of the coronavirus outbreak on the US economy. This follows the first emergency rate cut in over 12 years, introduced by the Fed on Tuesday. For the time being, no layoffs are evident as a result of the outbreak, but with more and more companies reporting disruption due to the coronavirus, this may change in the near future.
— Whetstone Analysis LLC (@AnalysisLlc) March 5, 2020
Claims rose the most in New York, California, and Virginia, and fell the most in Massachusetts, Illinois, North Carolina and Rhode Island. The four-week average of claims, a less volatile metric, rose 3,250 to 213,000. The number of people collecting benefits after an initial week of aid rose 7,000 to 1.73 million. The labor market remains in good health for the time being, although hiring has slowed throughout 2019 and has yet to recover. 20 million jobs have been created in the 11-year period of US economic expansion.
While hiring is slowing, it could be that the shortage of skilled workers will help secure existing jobs. Companies may be unwilling to lay off employees because it may be difficult to replace them later on, and this could work in the employees’ favor.
Gold prices have ticked downward from the strong growth seen in yesterday’s session, although remain above the psychological line of support at $1,650. Spot gold last traded at $1,657.00/oz, up 0.97% with a high $1,661.26/oz and a low of $1,635.17/oz.
Gold saw little reaction to the in-line labor market news, with coverage of the coronavirus outbreak taking center stage when it comes to short-term price movements in the precious metals markets.