US: Initial Jobless Claims dropped to 213K last week
- Initial Jobless Claims decreased to 213K vs. the previous week.
- Continuing Jobless Claims went down to 1.850M.
According to a report from the US Department of Labour (DOL) released on Thursday, the number of US citizens submitting new applications for unemployment insurance went down to 213K for the week ending March 7. The latest print came in short of initial estimates (215K) and was a tad lower than the previous week’s 214K (revised from 213K).
Additionally, the 4-week moving average decreased by 4K, bringing it to 212K from the revised average of the previous week (216K).
The report also indicated that Continuing Jobless Claims fell by 21K to 1.850M for the week ending February 28.
Market reaction
The Greenback adds to the weekly recovery on Thursday, prompting the US Dollar Index (DXY) to hit three-day highs around 99.50. The Greenback’s improvement remains well underpinned by unabated tensions in the geopolitical landscape.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.