"These data appear comforting in the light of the slowing in payrolls, but claims often are a not a reliable guide to employment in the early stage of a downturn, because the first thing firms do when demand falters is slow the pace of hiring, rather than start firing. Accordingly, right now we are more interested in hiring indicators than claims".
- Ian Shepherdson, Pantheon Macroeconomics
First-time jobless claims unexpectedly dropped during the last week while the number of Americans already receiving benefits declined to an almost 16-year low, pointing to sustained strength in the labour market. According, to the US Labour Department, the initial claims for state unemployment benefits declined 4,000 slipping to a seasonally adjusted 264,000 for the week ended June 4. Moreover, this drop is below the consensus of economists who expected the number to rise to 270,000. This was a welcome bit of news after last week's cluster munch. Despite, the May's hiring slowdown, now data is below the 300,000 mark, already for 66 straight weeks, showing the longest streak since 1973. However, still, the hiring slowdown shows a sluggish US economy. Moreover, the US growth came in at an annual rate of 1.4% from October through December and 0.8% from January through March. Moreover, a strong Greenback has hurt American exporters by making their products more expensive overseas, while low oil and natural gas prices have forced energy companies to slash investment.
Overall, the report indicates companies remain reluctant to reduce headcounts even after figures last week showed May was the worst month for hiring in almost six years.
© Dukascopy Bank SA