The number of those filing jobless claims fell last week to its lowest level in more than 52 years, the Labor Department reported on Wednesday.
The number of new registrations was 199,000, a number that has not been seen since November 15, 1969 when claims stood at 197,000. The report slightly exceeded Dow Jones’ estimates of 260,000 and was well below the previous week’s 270,000.
The Department of Labor has not cited any specific factors that caused the staggering decline, which could be an important signal for a labor market that has struggled to recover since the March 2020 Covid-19 shock.
The decline appeared to be at least partly due to seasonal adjustments. The unadjusted claims totaled 258,622, an increase of 7.6% compared to the previous week.
In other economic reports on Wednesday morning, GDP growth for the second quarter was revised upwards slightly to 2.1%, although this was below the estimate of 2.2%. In addition, durable goods orders fell by 0.5%, worse than expected from a plus of 0.2%.
Coupled with the decline in weekly claims, the on-going claims running a week later fell by 60,000 to 2.05 million, a new low from the pandemic era and a strong sign that the labor market is noticeably tightening.
The total number of beneficiaries from all programs fell sharply by 752,390 to 2.43 million by November 6, according to data.
The data comes in the midst of soaring inflation in the US, which has been moving faster than it has been in 30 years. Clogged ports and supply chains have contributed significantly to higher prices as manufacturers and service providers meet the increasing demand.
The collapse in weekly claims could attract the attention of Federal Reserve policymakers, who have maintained crisis-level policies despite the steady improvement in the labor market.
While the Fed has already announced that it will gradually reduce its monthly bond purchases, the markets are watching closely when the central bank could start raising rates. Although officials have cited the possibility of a possible rate hike in 2022, traders now give a 61% chance of three hikes in the next year, according to the CME’s FedWatch tracker.
Government bond yields were higher after the report, and Wall Street prepared for a negative stock opening.
The decline in claims was accompanied by indications that the economy grew a little faster than originally anticipated in the summer, although not quite as quickly as Wall Street expected.
Gross domestic product (GDP) and all goods and services produced rose a tenth of a percentage point from the original estimate of 2%, largely due to upward revisions in consumer purchases and private inventory investments, according to the Commerce Department.
The report also envisaged a massive revision of wages and salaries, which rose by $ 301.1 billion, an upward revision of more than 50% from the original estimate.
Finally, a separate report showed that orders for more durable goods fell for the second straight month.
However, excluding transport, orders for durable goods increased by 0.5% and excluding defense by 0.8%.
Orders in the non-defense capital goods sector, a proxy for corporate investment, declined 1.2% for the month. However, deliveries, open orders and stocks increased.