Release Explanation: This report provides the number of people claiming new unemployment benefits and the number of people who are continuing to claim unemployment benefits. Both metrics are provided in weekly and in 4-week moving average form. Very important that economic forecasts are based on the labor market. Economic strength builds from the willingness/confidence of firms to hire, without a strong labor market growth is hard to achieve. Over time the Employment Data will affect all economic releases, it does however take time for labor trends to form. A currency will strengthen or weaken in-line with the other releases that the Employment Data impacts, rather than as a knee-jerk reaction to these numbers printing. Economists tend to look more at the 4-week numbers because weekly numbers can be volatile although the market reacts to the headline numbers initially.
Trade Desk Thoughts: The number of workers making claims for new unemployment benefits rose 9000 to 654,000 last week, the Labor Department said today. Economists had expected to see claims increase by 6000 to 642,000. The previous week was revised to show a smaller decline of 25,000.
The four-week average, which aims to smooth volatility in the data, rose by 6,750 to 650,000. That's the highest since October 1982.
The increasing numbers of new claims at the beginning of this month indicates the unemployment rate will increase, said Matthew Carniol, chief currency strategist at TheLFB-forex.com. With the Fed expecting that employment will remain weak through 2011, expect to see consumption do likewise.
The number of workers continuing to claim benefits jumped 193,000 to 5,317,000, the highest level since the government started keeping track in 1967. In the past year, continuing claims have risen by more than two and a half million. The 4-week moving average of continuing claims increased by 124,250 to 5,139,750.
The unemployment rate for insured workers rose to 4.0%, the highest since June 1983.
The U.S. has lost 4.4 million jobs since the recession started in December 2007 with 2.6 million of those losses coming in the last for months alone, including the largest monthly drop since 1949 in December. The unemployment rate currently stands at a 16-year high of 8.1% but when taking into account those working part-time because full-time work isn't available along with workers who have given up on looking for employment, the percentage of unemployed rises to 14.8%, up nearly 6 percentage points from a year ago.
Forex Technical Reaction: S&P futures were moving higher after the retail sales report showed a better-than-expected result. The dollar was heading lower across the board as the futures rose.