US weekly jobless claims drop like a stone

One of the timeliest gauges of labor market strength in the US dropped like a stone in the latest week.

Initial US unemployment claims dropped by 19,000 during the week ending on 12 November to reach 235,000, according to the Department of Labor.

That was far less than the 4,000 person fall to 250,000 penciled in by economists.

The four-week moving average of jobless claims, which is meant to smoothe out the week-to-week fluctuations in the data, delcined by 6,500 to 253,000.

The prior week´s estimate of the four-week moving average was nudged higher by 250 persons to 260,000.

Secondary unemployment claims, which reference the week finishing on 5 November, also fell sharply, declining by 66,000 to 1.977m.

Large declines in claims in California, Illinois, and Missouri drove the large drop in secondary claims, Barclays Research´s Rob Martin pointed out in a research report sent to clients.

"Although the relationship between claims and employment seems to have weakened somewhat over the past year, the sharp drop in November claims should give the FOMC comfort that labor markets continue to tighten and that they continue to make progress toward the committee’s labor market objectives. On the whole, we view incoming claims data as very supportive of further improvement in labor market conditions this year," Martin said.