U.S. initial jobless claims drop in October end, indicates healthy labor market activity

U.S. initial jobless claims decelerated in the week ended 28 October. The jobless claims slowed to 229k, down from a revised 234k a week earlier. In recent weeks, initial jobless claims have improved steadily after the softness induced by the landfall of the major hurricanes in August and September. Initial claims from Texas normalized first, while claims from Florida have continued that trend. The initial claims in Florida dropped from 19,575 in the week ended 23 September to 8606 this week. Initial claims in that state had been running around 7000 per week before the storms, which imply that further modest improvement is likely, noted Barclays in a research report.

But rebounds in Texas and Florida were offset to some extent by continued issues in Puerto Rico, where initial claims rose further to 5971 as the island continues to struggle with the impact of Hurricane Maria. Initial claims fell immediately after the landfall, which is linked to inability to report and collect data

“More recently, initial claims jumped and probably better reflect the state of affairs on the island; we expect claims data for Puerto Rico to be elevated for some time”, stated Barclays.

The four-week moving average in initial claims dropped to 232k. Continuing claims dropped to 1.884 million in the week ended 21 October with the four-week moving average rebounded further to 1.895 million. The insured jobless rate dropped to 1.3 percent from 1.4 percent.

“Altogether, we read this week’s claims data as indicative of healthy labor market activity and see further progress towards normalization of the data following the hurricanes’ impact”, added Barclays.

At 17:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 35.4656. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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