US Markets
Thursday, October 5th, 2023 1:58 pm EDT
Key Points
- Strong Labor Market Data: The U.S. labor market remained robust as September ended, with weekly jobless claims holding at near recent lows. Initial filings for unemployment benefits totaled 207,000 for the week ending September 30, a modest increase of 2,000 from the previous week and below the consensus estimate of 210,000.
- Implications for Federal Reserve Policy: The report is significant as it comes at a critical time for the U.S. economy as the Federal Reserve considers its future monetary policy. The Federal Reserve is concerned that the ongoing tightness in the labor market could contribute to upward pressure on inflation, potentially requiring additional interest rate hikes. The markets are particularly sensitive to indications that the Fed may keep interest rates higher.
- Mixed Economic Signals: While the labor market data indicates strength, there have been mixed signals from other economic indicators. Earlier in the week, the Labor Department reported an unexpected surge in job openings, suggesting that employers continue to face challenges in filling positions. However, a separate report from ADP showed that private payrolls only grew by 89,000, falling well below Wall Street expectations. These data points arrive just ahead of the highly anticipated nonfarm payrolls report, which is expected to show a September increase of 170,000 jobs, down from 187,000 in August.
The U.S. labor market remained robust as September concluded, with weekly jobless claims staying near recent lows, according to the Labor Department’s report. Initial filings for unemployment benefits reached a seasonally adjusted 207,000 for the week ending September 30, showing a modest increase of 2,000 from the previous period and coming in below the Dow Jones consensus estimate of 210,000.
Continuing claims, which lag by a week, remained relatively stable at 1.664 million, below the 1.68 million estimate from FactSet. The four-week moving average of claims, which smooths out volatility, declined to 208,750, marking a drop of 2,500.
Following the release of the report, stock market futures dipped further into losses, while Treasury yields ticked higher. Dow futures were down approximately 100 points, and the 10-year Treasury note yield increased to 4.76%, up almost 3 basis points.
This report is crucial for the U.S. economy as the Federal Reserve deliberates on future monetary policy. Fed officials are concerned that the ongoing tightness in the labor market could lead to upward pressure on inflation, potentially necessitating further interest rate hikes. While traders currently anticipate a rate hike probability of less than 40% before the year-end, Fed officials have recently cautioned that while the path of rate increases is uncertain, rates are likely to remain elevated.
Earlier in the week, the Labor Department reported an unexpected surge in job openings, suggesting that employers continue to face challenges in filling positions. However, a report from ADP indicated that private payrolls only grew by a net 89,000, falling well below Wall Street expectations.
These data points arrive just ahead of the highly anticipated nonfarm payrolls report due on Friday, which is expected to show a September increase of 170,000 jobs, down from 187,000 in August.
For full original article on CNBC, please click here: https://www.cnbc.com/2023/10/05/weekly-jobless-claims-sept-30-2023-.html
