189K: US Initial Jobless Claims fell last week

189K initial jobless claims marked a decline from the previous week.
1.718M continuing jobless claims marked an increase.

US initial jobless claims fell to 189K. Thursday’s report from the US Department of Labour (DOL) put new unemployment insurance applications by US citizens at that level for the week ending 31 October. The figure undershot the initial estimate of 196K and the previous week’s 195K, which was revised from 194K.

At 194.75K, the 4-week moving average was down 2.25K from the previous week’s revised reading of 197K.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

For the week ending 24 October, continuing jobless claims climbed 23K to 1.718M, the report showed.

101.60: US Dollar Index edges higher

Around 101.60 on Thursday, the US Dollar Index (DXY) posted modest gains as the Greenback regained upward momentum and recouped part of the previous day’s losses.

Employment: key questions

Employment and currency valuations

As a gauge of economic health, labour market conditions play a central role in currency valuations. Strong employment, or low unemployment, supports consumer spending and economic expansion, strengthening the domestic currency. Inflation and monetary policy can also be affected when the labour market is particularly tight, meaning too few workers are available to fill vacancies. In that situation, limited labour supply and strong demand push wages higher.

Wage growth and underlying inflation

For policymakers, the rate of wage increases across an economy is a critical measure. Rapid pay growth gives households greater spending power, typically pushing consumer goods prices higher. Wage increases are unlikely to be reversed, making them a key element of underlying, persistent inflation, unlike more volatile drivers such as energy prices. This is why central banks worldwide closely monitor wage data when setting monetary policy.

Employment in central bank mandates

Central banks give different weight to labour market conditions according to their objectives. For some, employment-related responsibilities are explicitly part of their mandate alongside inflation control. Promoting maximum employment and stable prices forms the dual mandate of the US Federal Reserve (Fed), for example. By contrast, the European Central Bank’s (ECB) sole mandate is to keep inflation in check. Regardless of their specific mandates, policymakers regard labour market conditions as important because they indicate economic health and have a direct relationship with inflation.