"Claims at this time of year are very volatile, so we don't want to put too much stock in each week's fluctuations. Layoffs are low, which is very encouraging."
- Ryan Sweet, a senior economist at Moody's Analytics Inc.
When announcing the tapering Bernanke cited stronger labour market as the main reason to begin unwinding its programme of bond buying. Thursday's report, however, is sending alarming signs, as the number of initial jobless claims surprised markets to the downside. A weekly report showed claims climbed by 10,000 reaching 379,000 in the week ended December 14, the most since the end of May, and significantly higher than 336,000 figure expected by analysts. The less-volatile four-week moving average inched higher 13,250 to 343,500. In this case the moving-average is a more reliable indicator, as it is not distorted by the holiday season. At the same time, there were 2.88 million people, who still received benefits under the regular state programmes, 94,000 higher than a week earlier.
The Chairman considers the labour market to become "nearly balanced", as payrolls increased solidly in last two months. Moreover, the unemployment rate eased to a five-year low of 7.0% in November. This week's jobless report, however, suggests the Fed is unlikely to reduce the pace of its monthly purchases any time soon, in January in particular. The market reaction was limited, with EUR/USD rising just to 1.3676 soon after the report.
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