Weekly Initial Jobless Claims Jumps

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Weekly Initial Jobless Claims Jumps

Weekly Initial Jobless Claims Jumps To 219k

According to the official data, less people applied for first-time unemployment benefits as compared to the last week's data. This is a sign that the US labor market is still resilient, and the situation will improve even further after the Fed's recent rate cut.

The weekly initial jobless claims jumped to 219K during the week ending on 14th September. Conversely, the data from last week was 231K, which shows an improvement in the labor market.

Labor Market Shows Improvement

The reading of 219K was also below the forecast of 230K, which is also good news for the US economy. Continuing claims, which is also an important metric, also declined by 14K during the week.

Wednesday marked a major shift in the Fed's monetary policy as the central bank has lowered its interest rate from 5% to 4.75%.

According to Jerome Powell, they have managed the risk of a weak labor market and higher inflation. Now, everything is balanced after the recent rate cut as it will further strengthen the labor market.

However, Powell made it clear that they have no intention of resorting to the earlier regime of ultra-low rates. So, the markets can forget about near-zero rates, which were the norm before the recent rate hiking phase started.

According to the FedWatch tool, there's now a 67% chance that the Federal Reserve will cut the rates by 0.25% in November.

JPMorgan analysts also commented on the situation by saying that more large cuts could be made if the labor market remains weak. They also added that stabilization of the unemployment rate and job growth will allow the bank to move towards a neutral policy.

According to JPMorgan, November's rate cut will also be 50 bps, as the next job reports will show the weakening of the labor market.

For a more accurate picture of the US labor market, we will have to wait for next month's NFP report.

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