Daily Management Review

US Jobless Claims at Second Lowest Level Since Recession, But Nothing Alarming Say Analysts


US Jobless Claims at Second Lowest Level Since Recession, But Nothing Alarming Say Analysts
Joblessness is on the rise in the United States.

US recorded the lowest four-week moving average level since mid-May and the second-lowest since the end of the recession in 2009 as the figure increased by 6,550 to reach 268,250.

The rate of unemployment rose for the second consecutive week according to data released by the published by the Department of Labor on Thursday. The data shows that the number of unemployed increased by 3,000 to reach 270,000in the week ended 1 August.

Analysts had predicted a little lower figure of 265,000.

On the other hand there has been a reduction in the continuing jobless claims in the week to 25 July by 14,000 from the previous week to reach 2.26 million.
“On balance, low trend levels of initial and continuing jobless claims support our view of healthy labor markets," Barclays' analysts said in a communiqué.
"We look for non-farm payroll gains of 200k in tomorrow’s July employment report," noted the communiqué.
There were suggestions of continued tightening of the labor market conditions as the number of

Americans filing new applications for unemployment benefits rose less than as was expected last week. This was a source of relief for the government.

Another factor that indicated a possible strengthening of the labor market is the fact that the unemployment claims held below the 300,000 threshold for the 22nd consecutive week.

"The unemployment claims are consistent with continued solid job creation and a reduction in labor market slack over time," said John Ryding, chief economist at RDQ Economics in New York.

Economists had however anticipated the claims to rise to 273,000 last week. The July figures of unemployment were however not affected by the last week’s data. The nonfarm payrolls likely increased by 223,000 last month, matching June's gain, noted Reuters based on a survey of economists.

Despite the slackening of job growth rate when compared to the same period a year ago, the rate of unemployment, though slightly above the 5.0 percent to 5.2 percent range that most Federal Reserve officials consider consistent with full employment, at 5.3 percent.

The Fed is relatively satisfied with the rate of unemployment and the assessment of the job market claiming that the employment gains were "solid" and the slackness in the labor market had diminished "since early this year."

In a report by the global outplacement consultancy Challenger, Gray & Christmas, the firm noted that the planned job cuts by U.S. employers surged 136 percent to near a four-year high of 105,696 workers in July.

More than half of the planned job cuts emanated from the removal of 57,000 troops and civilian employees over the next two years by the U.S. Army.

However economists claim that this would have minimum effect on the labor market from the layoffs of the army as the people serving in the army are not included in the data prepared for the monthly payrolls count.

"When one considers the overall labor force volume as well as the fact that unemployment rates for veterans tend to not be that much different than unemployment rates for non-veterans, the probable impact of the planned job cuts in the army would have almost negligible impact on the labor market even as the proposed number seems big,” said Daniel Silver, an economist at JPMorgan in New York.

The IT sector would also see some job cuts with announcements of 18,891 retrenchments by IT companies like Microsoft, Qualcomm and Intel Corp.

(Source: www.digitallook.com & www.reuter.com) 

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