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US jobless claims decline ahead of nonfarm payrolls

H.S. Borji
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The number of Americans filing for first-time unemployment benefits fell back below 300,000 last week, adding further evidence the labour market was firming ahead of Friday’s highly anticipated nonfarm payrolls report.

US jobless claims declined 17,000 to 297,000 in the week ended November 29, reversing the previous week’s increase, the Labor Department reported today in Washington. The median estimate of economists called for new jobless applications to decline 19,000 to 295,000.

The less volatile four-week average increased 4,000 to 299,000.

Weekly jobless claims monitor the number of Americans filing first-time claims for unemployment benefits. The indicator is used to gauge current trends in the labour market. A drop in claims is generally associated with stronger hiring trends. Fewer jobless claims suggest employers are retaining more staff to meet demand.

The number of Americans continuing to receive jobless benefits increased 39,000 to 2.362 million, official data showed. The four-week average for continuing claims increased 1,500 to 2.355 million.

The figures came one day after the ADP Institute said US employers added more than 200,000 private payrolls in November for the sixth consecutive month. Private payrolls rose by 208,000 in November, following a gain of 233,000 the previous month. Economists forecast a sharper rise in the vicinity of 225,000. The service economy was responsible for the bulk of the gains. Service providers added 176,000 payrolls last month, the payroll processor reported Wednesday.

The Labor Department on Friday will release official payroll numbers for the month of November. Nonfarm payrolls are forecast to increase 230,000, according to a median estimate of economists polled by Bloomberg. If estimates hold, November would mark the tenth time in eleven months nonfarm payrolls growth was above the 200,000 mark. The unemployment rate is expected to remain steady at 5.8 percent after dipping 0.1 percentage point in October.

Employers added 214,000 nonfarm jobs in October, slightly below the average monthly gain of 222,000 over the previous 12 month period.

The Federal Reserve acknowledged that the labour market was making broad improvements in its latest Beige Book publication, which was released on Wednesday. The report, which is released eight times each year, summarizes comments received from businesses, economists and other experts covering the Federal Reserve’s 12 districts.

“Employment gains were widespread across Districts, and Districts reporting on business spending generally noted some improvement,” read the official summary based on information collected on or before November 24.

The report added, “A number of Districts also noted that contacts remained optimistic about the outlook for future economic activity.”

The Federal Reserve, which will hold its final meetings of the year on December 16-7, recently put an end to its record bond buying program and is evaluating the state of the economy to determine the appropriate course of action for raising interest rates.
Subdued wage growth is one of the last remaining roadblocks impacting an otherwise improving economic outlook. Average hourly earnings increased just 0.1 percent in October and 2 percent year-on-year, well below the historical average. Economists expect average hourly earnings to increase just 0.2 percent in November, a sign policymakers may wait a while longer before adjusting monetary policy.

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