The U.S. Labor Market – Outperforming Analysts’ Expectations

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For the week ended September 21, initial jobless claims in the U.S. dropped by 5K to 305K, in a directly opposite direction to Street estimates, which had thought the figure would rise to 325K.

The U.S. Labor Market – Outperforming Analysts’ Expectations

The statistics show employers are optimistic about economic prospects, despite the looming government shutdown likely this week, unless a last minute deal is reached. This level of jobless claims was last recorded in 2007, and shows that the destruction of jobs is lower.

U.S. Jobless Claims

Continuing jobless claims for the period ended September 26 came in at 2.823M versus consensus of 2.840M, a small miss, but one should note that the reported numbers have outperformed consensus estimates in each of the last four weeks.

A SocGen Cross Asset Research Report projects next Friday’s Non-Farm Payrolls employment report to improve by 240K in September and the unemployment rate to push lower to 7.085%.

The report also says the March 2013 (benchmark month) job count has been revised upwards by 345K, and going by past trends, the analysts expect the December 2013 cumulative upward adjustment to be about 575K jobs when reported in January.


The SocGen report quotes Fed Reserve Governor Jeremy Stein’s view that the Fed should link the proposed taper to hard economic data such as the jobless rate. “My personal preference would be to make future step-downs a completely deterministic function of a labor market indicator, such as the unemployment rate or cumulative payroll growth over some period. For example, one could cut monthly purchases by a set amount for each further 10-basis-point decline in the unemployment rate.”

In fact apart from rising interest rates, one other factor that probably deterred the Fed from commencing its taper program was the stubborn jobless rate.

Fed to improve U.S. employment market

The SocGen says Federal Reserve Bank of Minneapolis President Narayana Kocherlakota (FOMC voting member in 2014) would like the Fed to do “whatever it takes” to improve conditions in the employment market, and be “willing to use any of its congressionally authorized tools to achieve the goal of higher employment, no matter how unconventional those tools may be.”

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