December 9, 2022

Jobless claims hit a five-month low despite Fed efforts to slow the labor market

Jobless claims hit a five-month low despite Fed efforts to slow the labor market

A person arranges groceries at the El Progreso market in the Mount Pleasant neighborhood of Washington, DC, August 19, 2022.

Sarah Selbiger | Reuters

Initial claims for unemployment claims fell last week to a five-month low, a sign that the labor market is strengthening even as the Federal Reserve tries to slow things down.

Unemployment claims for the week ended September 24 totaled 193 thousand, down 16 thousand from the previous week’s revised total and less than 215,000 from Dow Jones estimates, according to the Ministry of Labor report Thursday.

The drop in claims was the lowest since April 23, and the first time claims fell below 200,000 since early May.

Continuing claims, which are a week late, fell 29,000 to 1.347 million.

Strong employment numbers come amidst Fed Efforts to Calm the Economy He brought down inflation, which is near its highest levels since the early 1980s. Central bank officials specifically cited the tight labor market and its upward pressure on salaries as a target for policy tightening.

Stock plunged After the report while Treasury yields were higher.

“The recent drop in layoffs runs counter to the Fed’s efforts to ease labor market conditions and push inflation down toward its 2% target,” said Jim Beard, chief investment officer at Planet Moran Financial Advisors. “Capital markets have listened to the Fed, and investors are feeling the pain. But the labor market? For now at least, it’s not listening.”

There was more bad news Thursday for the Fed on the inflation front.

The PCE price index, the Fed’s preferred inflation measure, showed a 7.3% increase in prices year-over-year in the second quarter, The Ministry of Commerce said Estimated final GDP for the period. That was up from the 7.1% reading in the previous two estimates for the second quarter and far from the 7.5% gain in the first quarter.

Excluding food and energy, core PCE inflation was 4.7%, up 0.3 percentage points from the previous two estimates but less than the 5.6% jump in the first quarter.

The Fed raised interest rates five times in 2022 for a total of 3 percentage points, and officials stressed the importance of continuing to rise until inflation drops close to the central bank’s 2% target.

“We have to do what we have to do to get back to price stability, because we can’t have a healthy economy, and we can’t have good labor markets over time, unless we get back to price stability,” Cleveland Fed President Loretta said. Mister for CNBCcroak boxIn an interview Thursday morning.

However, the Cleveland Fed instantaneous inflation gauge It shows little improvement on the inflation front in September even with the sharp drop in gas prices. The measure indicates an 8.2% increase in the core CPI and a 6.6% increase in core prices, compared to related readings of 8.3% and 6.3% in August.

The BEA’s final estimate of second-quarter GDP was down 0.6%, unchanged from the previous estimate. This was the second consecutive quarter of negative GDP, which meets an accepted definition of a recession.