US weekly unemployment claims surprised with a drop to 341K. Expectations were for a figure in the 360Ks, numbers that we were used to see.
If we examine this weekly figure in the technical eyes, we can see some range trading around 360K-370K, with a sudden drop to 341K. Similar numbers have been seen in January, but have proved to be a false break – probably due to seasonal factors. Are we now seeing the real break?
While a single week’s jobless claims isn’t always a good gauge for the economy, the drop of the figure closer to the 5 year lows recorded in January is certainly encouraging.
No seasonal or one time issues were reported. It’s important to note that these figures undergo revisions. If we see weekly figures stabilizing in the 340Ks, this can show an advance of the economy.
Figures of under 400K are thought to reflect growth in jobs – something we have seen month after month. However, these numbers are not enough to bring the unemployment rate down. As the economy improves, discouraged workers are trying their luck once again and enlarging the workforce – keeping the pressure on the unemployment rate.
A sustained improvement in jobless claims could lead to a drop in the unemployment rate, currently at 7.9%. The Fed’s tentative target for moving the interest rate is 6.5%.
Further reading: Job Gains of Over 200K Could Lead to Drops in the Unemployment RateGet the 5 most predictable currency pairs