US markets soared like the eagle this morning, jumping 1% at the opening bell. Good news for all, US unemployment figures, surprisingly beat forecasts. The number of people filing for initial unemployment benefits fell to 366,000 in the latest week — the lowest level since May 2008, and well below analysts’ estimates.
“This is unexpectedly great news for the US economy and for the markets. If claims can remain at this level, payroll growth will strengthen within a month or so. This will show in the 1st quarter of 2012. Coupled with the other economic data released in the past month, it looks like the US is slowly turning around.
The big IF in the way is Europe. US GDP is on a slow march upwards, but the fear of contagion from the eurozone and the effects that a default could have on American business is worrisome. All the work done by the Obama administration and the Federal Reserve could be destroyed by continued problems across the Atlantic, if Europe were to slip in a recessionary stage for any length of time, it would be difficult to keep US exports steady and US multinational companies depend on the oversea division to make profit or break even.
American lawmakers and economist have been gently trying to prod the EU into make some serious decisions on how they are going to handle the Europe Debt Crisis, while back home, US politicians have not been able to deal with the US debt, which has been placed on the backburner since the super committee was unable to reach agreements.
What does the drop in unemployment claims tells us, fewer Americans filed for their first week of unemployment benefits last week. So few in fact, that initial claims were at their lowest level since May 2008. What this means it that not many people lost their jobs last week. Historically Christmas season is pretty safe for employees; most employers will manage to keep employees on staff over the holidays and will make them redundant after the new year. Let’s hope this is not the case here.
Only an estimated 366,000 people filed initial jobless claims in the week ended Dec. 10, the Labor Department said Thursday. That was a decrease of 19,000 from the prior week, and far better than the bigger influx of claims that economists were expecting.
During the height of the recession, new claims were reaching up to 659,000 per week, so we do have a significant reduction. The job market is still far from robust, about 8.8. million jobs were lost in the financial and mortgage crisis, and as of last month, less than a third of those have been added back. Plus, the population has also grown during that time.
3.6 million people filed for their unemployment benefits the week ended Dec. 3, which tells us there are still a lot of people unemployed in the US.