The U.S. Labor Department reported Thursday that there were 220,000 initial unemployment claims in the week ending Nov. 15, a decrease of 8,000 from the previous week’s level.
In this period, the 4-week moving average fell by 3,000 to 224,250.
“The advance figure for seasonally adjusted insured unemployment during the week ending November 8 was 1,974,000, an increase of 28,000 from the previous week’s level. This is the highest level of insured unemployment since November 6, 2021, when it was 2,041,000,” the Department of Labor noted in its news release.
Market reaction
The US Dollar Index (DXY) is pulling back from session highs but remains in its daily range. At the time of writing, the US Dollar Index was up 0.1% on the day at 100.20
Frequently asked questions about recruitment
Labor market conditions are a key component of assessing the health of an economy and thus a major driver of currency valuation. Higher employment rates, or lower unemployment rates, have positive effects on consumer spending and thus economic growth, which strengthens the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications for inflation levels and thus monetary policy, as lower labor supply and higher demand lead to higher wages.
The pace of salary growth in the economy is key for policymakers. High wage growth means that households have more money to spend, which usually leads to higher prices for consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and sustained inflation, as salary increases are unlikely to be reversed. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank allocates to labor market conditions depends on its objectives. Some central banks explicitly have labor market powers that go beyond controlling inflation levels. For example, the US Federal Reserve has a dual mandate of promoting maximum employment and price stability. On the other hand, the ECB’s sole mandate is to keep inflation under control. However, despite their mandate, labor market conditions are an important factor for policymakers due to their importance as a measure of the health of the economy and their direct relationship to inflation.
