The Zhitong Finance App learned that data released by the US Department of Labor on October 22 shows that for the week ending October 17, the number of people applying for unemployment benefits for the first time in the US was 194,000 after seasonal adjustment, which was 200,000 lower than market expectations. The previous value was 199,000. This figure has been below the 200,000 mark for the sixth week in a row.
The historical sequence shows that 194,000 people were the lowest since the week of July 18 (189,000 people), indicating that corporate layoffs continued to be low.
According to data released during the same period, the number of renewed jobless claims for the week ending October 10 was 1,728,000, higher than market expectations of 1.71 million. The previous value was 1.71 million. The rise in the number of repeat applicants contrasts with the decline in the number of initial applicants: new layoffs are limited, but it takes longer for those who have already lost their jobs to return to work.
From an economic point of view, initial demand data confirms the current “low recruitment and low dismissal” situation in the US labor market. As previously announced, only 29,000 new non-agricultural jobs were added in September, and the unemployment rate rose slightly to 4.2% — the recruitment side has clearly cooled down, while the layoffs have not worsened.
At the policy level, the data was released at a time when the market's expectations of the Federal Reserve's austerity were heating up. After the September CPI and PPI completely exceeded expectations, according to data from the CME “Federal Reserve Watch” tool on October 22, the market expected that the probability that the Fed would keep interest rates unchanged at the October meeting was 83.9%, and the probability of raising interest rates by 25 basis points was 16.1%; the probability of increasing interest rates by 25 basis points in December was about 76%.
If the job market continues to be resilient, it will provide more room for the Federal Reserve to tighten its policy. However, there was a large single-frequency movement in the initial request data. A drop back is not enough to determine the trend; subsequent observations are still necessary in conjunction with multiple weeks of data.