The number of Americans filing for unemployment benefits dropped by 3,000 to 223,000 in the week ending March 02, according to an announcement made on Thursday by the US Department of Labor.
The drop was unexpected, with market consensus predicting a flat reading of 225,000.
Key Takeaways
- Weekly jobless claims fell unexpectedly to 233,000, below flat expectations of 255,000.
- The four-week moving average of jobless claims dipped to 226,250, dropping 3,000 from last week’s revised average.
- Seasonally adjusted insured unemployment dropped 50,000 from 1.805 million to 1.755 million.
- The average rate of unemployment for the week ending February 23 was 1.2%, dropping one percentage point from the unrevised rate of the week before.
The drop in weekly jobless claims defies market expectations and points to strength in the labor market despite a slowdown in jobs growth.
The previous week’s number of claims was revised upward by 1,000. The less-volatile four-week moving average also dropped by 3,000 to a total of 265,250, the lowest in a month following significant volatility.
Continuing claims (aid following an initial week of benefits) dropped 50,000 to 1.755 million after hitting a ten-month high the week before. The four-week moving average of continuing claims rose 4,750 to 1.77 million.
The US Labor Department stated that no states were estimated for the most recent report.
US initial jobless claims 223K vs 225K estimate https://t.co/hVS7d6SLRW pic.twitter.com/TeLbFJ88Em
— tradermeetscoder (@trdrmtscdr) March 7, 2019
Job Growth Slowing
Recent ISM survey’s show manufacturing and services sector employment dropping in February, although part of the potential slowdown is likely due to a shortage of workers as the labor market tightens and nears full capacity.
The Federal Reserve has confirmed that labor shortages are being reported as factors limiting employment growth in certain areas. Shortages have been confirmed in IT, manufacturing, and construction as well as the restaurant and trucking industries.
More insight into the state of employment growth will be gained from the February employment report due for release on Friday.
However, for now, growth continues to push down the rate of unemployment which is predicted to have dropped to 3.9% in February. A Reuters survey states that non-farm payrolls may have increased by around 180,000 in the same month following a surprise surge of 304,000 the month prior.
While the labor market looks healthy, it would appear that the benefits of the major tax cuts approved by the Trump administration are starting to fade and another global economic slowdown may be underway, aided in part by the ongoing trade war between the world’s two largest economies as well as factors such as Brexit uncertainty.
Expert Outlook
The gold market has seen little reaction to the report which was relatively in line with market expectations. Spot gold last traded at $1,284.40/oz, down -0.04% with a session high of $1,288.66 and a low of $1,281.86/oz.
Price action saw some volatility following the ECB press conference statements revealing no change in the Eurozone interest rates as well as another series of long-term loans for banks over the next two years, a dovish policy indicative of fears of a slowdown.
Today’s initial jobless claims report shows that layoffs are not quite as low as the post-recession bottom, but overall points to continued strength in the healthy US labor market.