Heading into the final week before the big holiday weekend, the American labor market has some good news for us. Apparently the number of people in the United States filing applications for jobless benefits rose only very slightly from a near 49-year low. While the number did rise, it was far less than what analysts expected, and that suggests the labor market is moving ahead and the economy is getting stronger.
According to the Labor Department, the data shows us that initial state unemployment benefit claims increased by 8,000 for the week leading up to December 15 to a seasonally adjusted 214,000. The week before, claims had fallen to 206,000, which is quite close to the 202,000 from mid-September; that was the lowest level for this metric since December of 1969.
Forecasts had estimated unemployment claims would grow by 216,000 last week.
The four-week moving average for initial claims—which is considered to be a better labor market trend measure because it smooths out the week-to-week volatility—fell 2,750 to 222,000 last week. That is important because the surprising jump to an eight-month high of 235,000 (for the week ending November 24th) raised concerns over potential slowing in the labor market.
Nonfarm payrolls grew by 155,000 jobs last month after the earlier surge in October which brought them up to 237,000.
Looking back it is easier to determine, of course, that our November slowdown in job growth was mostly due to a shortage of workers (and not a shortage of jobs. Indeed the unemployment rate at that time had reached that 49-year low of only 3.7 percent, which is only a smidge off the Fed’s 2019 forecast of 3.5 percent.
All this in mind, then, it is certainly evident that the US labor market is improving. And with that, the Federal Reserve raised interest rates, on Wednesday, marking the fourth such raise this year. Of course, analysts had forecast fewer rate hikes next year, a sure sign of the central bank’s loosing of their grip even as we continue to face more financial uncertainty and slowing economic growth around the world.