The first weekly unemployment claims fell to 199,000 last week, reaching the lowest level since 1969, beating economists’ expectations of 260,000.
Weekly applications for unemployment benefits have declined in recent weeks as employers keep the workforce in a tight labor market.
The latest weekly data was released a day early due to the Thanksgiving feast on Thursday.
“Getting new claims below the 200,000 level for the first time since the pandemic began is truly significant, and depicts further improvement,” said Mark Hamrick, a senior economic analyst at Bankrate. “The burdens associated with higher prices, shortages of supplies and job vacancies are offset by low levels of redundancies, wage growth and falling unemployment. Growth is likely to be above par in the foreseeable future.”[ads1];
Companies across almost all sectors are struggling to find employees, sticking to the ones they have and raising wages to attract more employees.
While the economy still lacks around 4 million jobs compared to pre-pandemic levels, 531,000 jobs were added last month, according to the latest monthly employment report from the Bureau of Labor Statistics. Unemployment fell to 4.6 per cent, down from 4.8 per cent.
If the initial weekly requirements remain below pre-pandemic levels, the improved labor market could put pressure on the Federal Reserve to accelerate its downsizing plan, which Fed Chairman Jerome Powell announced this month will amount to $ 15 billion a month. Faster downsizing can advance the plan for interest rate increases and lead to the central bank considering raising its reference interest rates earlier.
Since June 2020, the central bank has bought $ 120 billion in bonds each month – $ 80 billion in government bonds and $ 40 billion in mortgage-backed securities – to provide liquidity and keep the financial system functioning effectively. Powell announced at the time that the central bank is “prepared to adjust the pace of purchases if changes in the economic outlook so require.”