US: Initial Jobless Claims increased to 240K last week
- Initial Jobless Claims rose to 240K vs. the previous week.
- Continuing Jobless Claims went up to 1.919M.
US citizens filing new applications for unemployment insurance climbed to 240K for the week ending May 24, as reported by the US Department of Labor (DOL) on Thursday. This print came in above initial estimates and the previous week's revised tally of 226K (from 227K).
The report also highlighted a seasonally adjusted insured unemployment rate of 1.3%, while the four-week moving average dropped by 250 to 230.750K from the prior week’s revised average.
Moreover, Continuing Jobless Claims increased by 26K to reach 1.919M for the week ending May 17.
Market reaction
The Greenback comes under pressure and retests the 99.60 region after hitting new multi-day highs past 100.50 when tracked by the US Dollar Index (DXY) earlier on Thursday, while investors continue to digest results from the domestic calendar ahead of comments from Fed officials.
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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