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The number of Americans applying for unemployment benefits saw a moderate increase last week, remaining near the lowest level since 1969. Coupled with unexpectedly high levels of job creation in the private sector in August, the report indicates ongoing strength in the US labor market.

Key Takeaways

• Initial jobless claims rose to 217,000 for the week ended August 31, according to a report released by the Labor Department on Thursday.
• Estimates for last week’s jobless claims data had the figure at 215,000 to match figures from the week before. Claims for multiple states were estimated due to the Labor Day holiday.
• The four-week moving average of initial claims, which irons out volatility, rose 1,500 to 216,250.

It seems that so far, the impact of the trade war has yet to negatively affect layoffs in the US, despite a related drop in business investment and weak activity in the manufacturing sector. Manufacturing has suffered due to the tariffs imposed by the US and China on goods and materials from each nation.

However, due to tight labor market conditions, it is likely that businesses are reluctant to let go of staff in case the rehiring process would be too difficult or costly later on. The shortage of skilled laborers, and the high performance from the labor market overall, continues to buoy other, more vulnerable areas of the US economy.

Jobless claims ticked up to 217k from 216k (revised from 215k) w/ 4w avg (chart below) ticking up to 216k from 215k; continuing claims fell 39k to 1662k pic.twitter.com/3qY3zKRnrS

— Liz Ann Sonders (@LizAnnSonders) September 5, 2019

Report Data

Initial claims rose a mere 1,000 to a seasonally adjusted 217,000 for the week ended August 31, with date for the prior week revised upward by 1,000. Claims for California, Hawaii, Kansas, Puerto Rico and Virginia were estimated last week because of the Labor Day holiday on Monday. The four-week moving average of claims rose by 1,500 to 216,250 last week. Continuing claims dropped by 39,000 to 1.66 million for the week ended August 24, and the four-week average of these claims dropped by 6,250 to 1.69 million.

Job growth has slowed significantly from an average of 223,000 per month in 2018; but remains above the 100,000 required to keep pace with growth in the working-age population, and the unemployment rate is estimated to have held steady at 3.7% in August for the third month in a row. A separate report released on Thursday indicated that private sector employment rose more than expected in August.

Boosted by consumer spending and a tight labor market, the US economy is now in its 11^th year of expansion, the longest expansion ever, despite headwinds such as the trade war and the ongoing economic slowdown taking place worldwide.

Market Reaction

Gold prices have dropped today in the face of multiple reports affecting risk appetite in the marketplace. An ADP employment report that private sector employment rose well above expectations in August, and recent jobless claims data continues to reflect a stable and healthy jobs market. US-China trade talks are due to reopen in October, and this is also easing concern among traders and weakening the short-term use case for gold as a safe haven asset.

Spot gold last traded at $1,527.64/oz, down -1.46% with a high of $1,556.86/oz and a low of $1,527.07/oz.