The latest weekly jobless claims have beaten expectations of economists by more than 60,000. Although the latest weekly data was released on Wednesday, one day earlier than usual, it was because of the Thanksgiving holiday on Thursday. The weekly jobless claims stood at 199,000; much lower that the 260,000 estimate given by economists.
Continuing claims for regular state unemployment benefits levels are also promising. They run a week behind. These claims also decreased and now stand at 2.05 million. They are also slowly inching towards pre-pandemic levels. These claims are also a pandemic-era low. It indicates that the labor market is tightening.
Last week the claims were at the lowest level since March 2020, when the pandemic affected the labor market. The recent continuing claims are also coming closer to the 2019 average of approximately 1.7 million per week.
The trend of falling weekly jobless claims has been attributed to some extent to employers holding on to their employees. The labor market is tight and employers are offering higher than usual wages as well as perquisites to retain their employees. There is a a shortage of employees in almost all sectors. Holding on to their current employees with increased benefits plus offering good wages to new hires has become a part of companies’ strategies.
Although the economy has not reached pre-pandemic levels as it is still short by around 4 million jobs, the latest monthly employment statistics said that 531,000 jobs were added last month. The Bureau of Labor Statistics also reported that the unemployment rate fell to 4.6 percent; the earlier rate was 4.8 percent.
The improved labor market could lead to an early tapering by the Federal Reserve. Fed chair, Jeremy Powell, who was recently nominated for a second term by President Biden, announced that the Fed could accelerate its tapering schedule, depending on the outlook of the market.