US jobless claims fall
US jobless claims fell to their lowest level since 1973 in the week ending April 16, 2016. According to data provided by the US Department of Labor, US (QQQ) (SPY) (VFINX) unemployment claims fell by 6,000 to 247,000 claims for the week ending April 16. This was below the Market’s expectation of 263,000. Last week’s level was the lowest level since November 24, 1973, when it was 233,000.
What does the unexpected fall in jobless claims mean?
The unexpected fall in jobless claims means that employers are positive about the outlook for US demand. Economists are expecting that there will be further job growth in the economy, which will support consumer spending. This means the economy should grow after weakness in the first quarter.
Jobless claims are one of the best indicators of the health of an economy. Improvement in the economy raises the question whether the Fed will remain dovish about interest rate hikes. Policymakers are focusing on the global economy (ACWI) (VTI) (VEU) as they make decisions about further rate hikes, as they believe the US economy (IWM) (IVV) faces risks related to the sluggish global economy. However, the US labor market showed strong improvement last week. The fall in unemployment benefits gives policymakers more room to consider a rate hike.
In the next part of this series, we’ll analyze the change in weekly US crude oil inventories.