The number of Americans applying for unemployment benefits soared well above a yearly high last week, rising by 37,000 applications and defying expectations of a modest 8,000 increase. However, claims had hit a 49-year low the week before, and the recent increase does not necessarily spell weakness in the labor market.
Key Takeaways
- Jobless claims hit a 19-month high last week, rising from 193,000 to 230,000 vs. approximately 201,000 expected.
- Claims hit a 49-year low the week before, and are still within the broad range seen over the last year.
- The less-volatile monthly average rose 4,500 to 206,000 last week.
Claims hit the highest point since September 2017 for the week ended April 20, but underlying market trends are still strong. Claims fell to 193,000 the week before, the lowest figure since September 1969.
Claims around this time of year tend to be volatile, with holidays such as Easter and Passover as well as spring breaks, affecting the data. No states were estimated last week according to the Labor Department. The four-week moving average tends to be more stable, and had a far more modest increase of 4,500 to 206,000 last week.
Job gains averaged 180,000 in Q1 2019, with only 100,000 jobs per month required to bridge the gap between growth in the working-age population. Unemployment remains at 3.8%, with the central bank predicting 3.7% by the end of 2019.
The labor market has had an exceptionally strong year, bolstering other, weaker areas of the economy such as housing and manufacturing which have suffered under fiscal policy measures and the ongoing trade war between the US and China, as well as a general economic slowdown taking place worldwide.
Initial Jobless Claims Surge Most In 18 Months Of 50-Year Lows https://t.co/vO68KMZsaG pic.twitter.com/5EzNAz5nCe
— mark (@mark25916680) April 25, 2019
Expert Outlook
Bloomberg economic analyst Eliza Winger stated “Jobless claims continue to point to tight labor market conditions. The number of workers filing new applications for unemployment increased more than expected, but it is not unusual to see some volatility in the week before or after the Easter holiday. Jobless claims will likely revert back to the pre-holiday trend.”
Market Reaction
Gold has ticked upward following the unexpected weekly jobless claim data. Spot gold is up 0.19% and trading at $1,277.90/oz with a high of $1,278.35/oz and a low of $1,273.45/oz. Trading within a tight range, gold remains under pressure from a strong dollar this week, partially offset today by rising crude oil prices.
Gold Price Chart
More articles from Conor Maloney
