Despite Surging Inflation, Unemployment Claims Fall to Historic 52-Year Low
A Department of Labor report issued on Nov. 24 described a significant fall in unemployment claims, with weekly claims being at their lowest point of the past 52 years.
In the week ending Nov. 20, the advance figure for seasonally adjusted initial claims was 199,000. This is the lowest level for initial claims since November 15, 1969, when the Department of Labor reported 197,000 such claims.
The 4-week moving average was 252,250, a reduction of 21,000 from the previous week’s revised average. This figure, a better overall picture of volatility, also represents the lowest level for this average since right before the pandemic took its toll on the labor market on March 14, 2020. At that time last year, the average was pegged at 225,500.
The report exceeded Dow Jones estimates of 260,000 unemployment claims, pushing even further beyond previous week’s estimated 270,000 claims, per CNBC.
The Department of Labor did not specify any particular shift that may have caused such a plummet in unemployment numbers alongside their data. However, these positive economic indicators might signal a recovering labor market that has been challenged since the onset of the COVID-19 pandemic in March of 2020.
This week’s report follows several consecutive weeks of decline in unemployment insurance claims, a welcome sign for many after a year of historically tight labor markets.
This latest Department of Labor report comes amid surging annual inflation, which currently hovers right above 6%, per the Consumer Price Index — the highest levels in decades. The decrease in unemployment insurance claims could suggest an improving unemployment rate, but this is not certain. A decline in unemployment claims could also signal that employers are retaining their employees more efficiently, not necessarily indicating that those who were unemployed and collecting benefits have now found new positions.
This month’s jobs report will serve as a better tool to judge whether, if at all, this decrease in unemployment claims has affected the labor market. Inflationary pressures might force the Fed’s hand in raising interest rates for the first time in over a decade if employment numbers continue to improve.
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