New jobless claims fell far more than expected to the lowest level since November 1969 last week, underscoring the present tight labor market conditions as initial unemployment claims near 2019 levels while job openings hold near record highs.
The Labor Department released its jobless claims report on Wednesday, a day earlier than usual due to the Thanksgiving holiday. Here were the main metrics from the print, compared to consensus estimates compiled by Bloomberg:
Initial unemployment claims, week ended November 20:199,000 vs. 260,000 expected and 268,000 during prior week
Continuing claims, week ended November 13:2.049 million vs. 2.033 million expected and 2.080 million during prior week
The total number of new weekly filings fell to a fresh virus-era low for a seventh straight week. During the comparable week last year, initial filings came at well over 700,000. Claims also fell below their 2019 weekly average of approximately 220,000.
Continuing claims for regular state unemployment benefits have also drawn closer to pre-virus levels. After coming in at the lowest level since March 2020 last week, continuing claims also neared their 2019 average rate of about 1.7 million per week.
And if this week's jobless claims report comes in as expected with further improvement in both new and continuing claims, it would also bode well for November's monthly jobs report from the Bureau of Labor Statistics. This week's claims report coincides with the survey week for that data, which is due for release next week. Consensus economists expect that report to show non-farm payrolls rose by half a million in November, with the unemployment rate ticking down to 4.5% from 4.6% in October.
The past couple months' worth of jobless claims reports have offered just one look at a labor market that has grown increasingly tight as the economic recovery progressed. Though the labor force participation rate has yet to return to pre-pandemic levels, the number of those rendered newly unemployed has fallen precipitously, with many employers incentivized to keep their current workforces as job openings and labor shortages across industries remain elevated. Job openings werelast reported at 10.4 million as of the end of September, with this sum dipping only slightly from July's record high of more than 11 million.
Monetary policymakers have been dealt the delicate task of further stoking employment growth while keeping inflation from running too hot for too long. Federal Reserve Chair Jerome Powell, who just this week wasrenominated to lead the central bank for another four-year term, has suggested that supply-side constraints contributing present levels of elevated inflation will eventually begin to ease.
"In our assessment — against a backdrop of moderating growth and slowing inflation in 2022 — policymakers will have to shift focus next year from price pressures to a complete labor market recovery, which will take some time, delaying an eventual rise in interest rates," wrote Rubeela Farooqi, chief U.S. economist for High Frequency Economics, in a note.
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