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The number of Americans filing for unemployment benefits reached the lowest level since 1969 last week, indicating continued strength in the labor market. Claims were reported at 202,000 vs 216,000 expected, up from 211,000 the week before.

Key Takeaways

• Initial jobless claims dropped unexpectedly from 211,000 to 202,000 in the week ended March 30 vs the expected jump to 216,000.
• Claims have now hit a 49-year low, the lowest since early December 1969.
• Initial jobless claims are a key indicator of layoffs, and the recent data points to ongoing strength in US labor despite economic weakness elsewhere.

The economy has undeniably lost some momentum as the afterglow fades from the $1.5 trillion tax cut implemented by the Trump administration. However, US labor appears to be going strong with a low unemployment rate and positive indicators in most areas.

Hiring has slowed, but much of this is attributed to a shortage of skilled workers.

Data for the previous week was revised slightly upward by 1,000, and in the most recent report on initial claims, the figures for state of California were estimated.

The less-volatile four-week moving average also dropped last week, dipping 4,000 to 213,500, the lowest level since early October 2018. The monthly average is still a far sight from the 49-year low seen in the weekly figure, and will most likely come under particularly close scrutiny from market analysts over the coming weeks.

Continuing claims dropped 38,000 to 1.72 million for the week ended March 23. The four-week moving average of continuing claims dropped 8,000 to 1.74 million.

US Initial Jobless claims hit their lowest level since December 1969: 202,000. pic.twitter.com/EluqpVhSxO

— Charlie Bilello (@charliebilello) April 4, 2019

Growth Slowdown

Jobs growth has nevertheless slowed down, and more light will be shed on employment in the March employment report due for release on Friday by the Department of Labor. Nonfarm payrolls are expected to rise by 180,000 jobs after an increase of just 20,000 the month before.

The average rate of jobs growth in 2018 was 225,000.

No change is expected to the unemployment rate which is at 3.8%.

Expert Outlook

“Gold looks to be consolidating around $1,290 following recent mixed data releases out of the U.S. and may see some respite from a further test toward the $1,281-$1,283 support leading into tomorrow’s NFP print following the soft ADP figure,” MKS says.

“The 100-day moving average at $1,283 remains the key downside support level, with potential extension through to $1,263 and the 200 DMA around $1,250. Broad resistance through $1,295-$1,300 currently caps further top-side gains, while the 50-day moving average sits at $1,308.50.”

Market Reaction

The price of gold has had a strong reaction to the news, slipping under intense selling pressure.

Spot gold is down 0.65% and trading at $1,281.48 with a high of $1,293.51/oz and a low of $1,281.33/oz. Gold is now trading at the low end of the range following the stronger-than-expected jobs report and rising Treasury yields.