U.S. initial jobless claims drop sharply, indicates continued progress in labor markets

U.S. initial jobless claims for the week ending 12 November dropped to 235,000, much below the consensus expectations of 257,000. The sharp decline in initial claims in that week brought the four-week moving average in initial claims to 253,000. The initial claims data takes the survey week for the November employment report and indicate towards a rise in growth of employment in comparison to the last several months.

Meanwhile, continuing claims also continued to drop. In the week ending 12 November, continuing claims reached 1977k from 2043k in the week ending 5 November, noted Barclays in a research note. Changes in continuing claims were moderate at the state level. Large falls in claims in the states of Missouri, Illinois and California led to the large decline in the claims. However, just a few states saw a rise in the claims in the week ending 12 November and none of them were large increases.

Even if the relationship between employment and claims appears to have slightly softened in the past year, the sharp decline in claims of November is expected to give the FOMC comfort that labor markets continue to tighten and that they keep on making progress toward the labor market objectives of the committee, according to Barclays.

Overall, the incoming data of jobless claims are quite supportive of labor market conditions’ further improvement in 2016, added Barclays.