"Stronger job growth may be on the horizon. When we start seeing improvement in the labor market, I think that will provide another tailwind for confidence, and spending, going forward."
- Millan Mulraine, director of U.S. rates research at TD Securities
The number of Americans filing for jobless benefits plunged to the lowest level since April 2006, however, not due to a substantial improvement in the labour market, but due to technical problems in claims processing that caused two states to report fewer applications. The U.S. Labor Department said first-time jobless claims tumbled by 31,000 in the week ended September 7, reaching 292,000 from 323,000 a week earlier and outpacing analysts' expectations of a 323,000 reading. The latest technical problem masking the true picture of the labour market and clouding the last major report before the key Federal Reserve's meeting. The most of decline came from two states, which both were upgrading their computer systems and were not able to process all the claims they received during the week. Figures also showed the four-week moving average, which excludes weekly volatility, hit the lowest since 2007 reaching 321,250. It is difficult to assess the health of the labour market being based only on the last report, however, fewer dismissals should obviously become a precursor to a gain in hiring once domestic demand strengthens and the effects of sequester become less pronounced. Moreover, the U.S. economy added just 176,000 works in August, compared with 198,000 a month earlier, while the payrolls to population gauge is slightly lower than in the same period a year earlier, suggesting it is too early to say the world's largest economy is strong enough to perform at the same pace without any additional stimulus.
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