US labour market regaining footing
Weekly jobless claims plunge to an 18-month low in late September
The number of Americans filing new claims for jobless benefits dropped by the most in three months last week, suggesting the labour market recovery was regaining momentum after a recent slowdown, as the wave of Covid-19 infections began to subside.
The weekly unemployment claims report from the Labour Department yesterday, the most timely data on the economy’s health, also showed the number of people on state unemployment rolls plunging to an 18-month low in late September.
Improving labour market conditions bode well for the government’s closely watched employment report for September and also provide ammunition for the Federal Reserve, which signalled last month it could begin reducing is monthly bond buying as soon as November.
“The labour market is back on track after a few weeks of rising claims threw a question mark into the markets’ understanding of just how solid the economic outlook really is,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “The Fed has the evidence it needs to start paring back its emergency stimulus purchases when it meets next month.” Initial claims for state unemployment benefits decreased 38,000 to a seasonally adjusted 326,000 for the week ended October.
Biggest drop
That was the biggest drop since late June. Economists polled by Reuters had forecast 348,000 claims for the latest week. Unadjusted claims, which economists say offer a better read of the labour market, tumbled 41,431 to 258,909 last week.
California led the drop in claims last week. There were also decreases in Michigan, Ohio, Washington DC and Missouri. They offset notable increases in Pennsylvania and Virginia.