US weekly Initial Jobless Claims rise to 263K vs. 235K expected
- Initial Jobless Claims in the US rose by 27,000 in the week ending September 6.
- The US Dollar Index stays in negative territory below 98.00.
There were 263,000 initial jobless claims in the week ending September 6, according to data published Thursday by the United States (US) Department of Labor (DOL). This figure followed the previous week's print of 236,000 (revised from 237,000) and came in worse than the market expectation of 235,000.
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 August 30 was 1,939,000, unchanged from the previous week's revised level," the DOL noted in the press release.
Market reaction
The US Dollar Index pushes lower following the disappointing Jobless Claims data and was last seen losing 0.08% on the day at 97.70.
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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