- Initial unemployment subsidy requests fell to 227K compared to the previous week.
- Continuous applications for unemployment subsidy increased to 1,965m.
The US Department of Labor (DOL) on Thursday that the number of US citizens who submitted new unemployment insurance fell to 227K for the week ended on July 5. The last figure was below the initial estimates and the revised figure of the previous week, which was placed at 232K after being adjusted since 233k.
The report indicated an seasonally adjusted unemployment rate of 1.3%. In addition, the four -week mobile average decreased by 5,750k, taking it to 235.5k from the revised average of the previous week.
In addition, continued applications for unemployment subsidy increased by 10k to reach 1,965m for the week ending on June 28.
Market reaction
The dollar maintains its trade in maximum daily after the publication of the data, reversing the losses of Wednesday and motivating the US dollar index (DXY) to recover the upper end of the range about 97.70.
EMPLOYMENT – FREQUENT QUESTIONS
The conditions of the labor market are a key element to evaluate the health of an economy and, therefore, a key factor for the assessment of currencies. A high level of employment, or a low level of unemployment, has positive implications for consumer spending and, therefore, for economic growth, which drives the value of the local currency. On the other hand, a very adjusted labor market – a situation in which there is a shortage of workers to cover vacancies – can also have implications in inflation levels and, therefore, in monetary policy, since a low labor supply and high demand lead to higher wages.
The rhythm to which salaries grow in an economy is key to political leaders. A high salary growth means that households have more money to spend, which usually translates into increases in consumer goods. Unlike other more volatile inflation sources, such as energy prices, salary growth is considered a key component of the underlying and persistent inflation, since it is unlikely that salary increases will fall apart. Central banks around the world pay close attention to salary growth data when deciding their monetary policy.
The weight that each central bank assigns to the conditions of the labor market depends on its objectives. Some central banks have explicitly related mandates to the labor market beyond controlling inflation levels. The United States Federal Reserve (Fed), for example, has the double mandate to promote maximum employment and stable prices. Meanwhile, the only mandate of the European Central Bank (ECB) is to maintain inflation under control. Even so, and despite the mandates they have, labor market conditions are an important factor for the authorities given its importance as an indicator of the health of the economy and its direct relationship with inflation.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
