FXStreet (Mumbai) – The U.S. Labor Department today reported a rise in the number of Americans filing claims for unemployment benefits for the week ending December 26th. Initial claims for unemployment benefits increased by 20,000 to a seasonally adjusted 287,000 last week, highest reading recorded since July this year. A Reuters poll had forecast claims would increase up to 270,000 in week ending December 26th. On the other hand the number of people receiving benefits after an initial week of aid increased 3,000 to 2.20 million in the week ended Dec. 19.
The figures probably indicate cooling of the labor market. It must not however be forgotten that in recent months the weekly readings for claims were at 42-year low. Some analysts feel this increase in numbers is only temporary and can be attributed to holiday factors.
Labor Department however said there were no special factors that impacted the numbers. A number of economists expect the job market to improve at a slower pace in 2016 although the unemployment rate will continue to fall from its current 5 per cent.
The four-week moving average increased 4,500 to 277,000, continuing to remain below the 30,000 threshold for the 43 consecutive weeks, which is the longest stretch since the early 1970s. Below 300,000 is a threshold that indicates a buoyant labor market.
The labor market has in the last few months shown signs of strengthening. It boosted the Federal Reserve’s confidence to go ahead with the interest rate hike in December. The Fed noted that the economic recovery was on strong footing and ready for a gradual increase in rates. The data released in this last week of the year however did not look promising at all. Yesterday, the pending home sales data was out and contrary to market expectations it dropped in November. Existing home sales also declined in November raising doubts about the recovery of the very significant housing sector.
(Market News Provided by FXstreet)