US weekly Initial Jobless Claims rise to 241K vs. 224K expected
- Initial Jobless Claims in the US rose by 18,000 in the week ending April 26.
- US Dollar Index clings to small daily gains below 100.00.
There were 241,000 initial jobless claims in the week ending April 26, the weekly data published by the US Department of Labor (DOL) showed on Thursday. This print followed the previous week's print of 223,000 (revised from 222,000) and came in worse than the market expectation of 224,000.
Further details of the publication revealed that the advance seasonally adjusted insured unemployment rate was 1.3%.
"The advance number for seasonally adjusted insured unemployment during the week ending April 19 was 1,916,000, an increase of 83,000 from the previous week's revised level," the DOL said in its press release and noted that this is the highest level for insured unemployment since November 13, 2021, when it was 1,970,000.
Market reaction
The US Dollar (USD) Index retreated with the immediate reaction to this report and was last seen gaining 0.1% on the day at 99.75.
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.
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