And now for some good news: the number of Americans filing for unemployment benefits remains at a 43-year low (last week). Of course, this points to a sustained labor market strength, a strength which could be establishing a new path to economic stability and—the ultimate sign of such—the best potential for the Federal Reserve to raise interest rates in December.
Indeed, Thursday’s Labor Department report has added to data like September’s auto sales as well as numbers from both the manufacturing and services sectors. All the numbers certainly reinforce the perspective that economic growth is picking up now, after a somewhat slow start in the first six months.
“When the labor market gets very tight, firms do not want to lay off anyone that they suspect they might want to rehire at some point because chances are, they will not be available when the firm tries to call them back,” comments Amherst Pierpont Securities chief economist Stephen Stanley.
In addition, MUFG Union Bank chief economist Chris Rupkey notes, “The data are making the Fed’s current policy look too wrong footed and the markets are waiting for them to get back on track, most likely in December.” This could suggest, of course, that employers are anxious to retain employees even as pace slows. Going into the holiday season, though, employers are always looking to take on more people, even if just for the season.
Taking a closer look at the numbers, initial state unemployment benefits claims remained at a seasonally adjusted 246,000 (for the week ending October 8). This is the lowest reading since November of 1973, according to the Labor Department. Claims for the week before showed 3,000 fewer applications than previously reported (after revisions); marking the 84th consecutive week, keeping claims below the 300,000 threshold, that marks more “robust” labor market conditions.
According to Barclays economist Blerina Uruci, “The underlying trend in imported deflation is improving and is consistent with a gradual waning of the drag from the stronger dollar and lower global commodity prices,” who also adds that any improvement in the realm of imported inflation will likely improve stability in domestic core goods prices as well as a push towards a higher overall core Consumer Price Index.