MACRO: US Jobless claims plunge to 5-decade low

The number of US citizens applying for unemployment benefits tumbled in the week ending November 20th to the lowest level in more than half a century, with employers opting against layoffs amid a persistent shortage of workers.

Initial jobless claims fell to 199k from the previous week's upwardly revised 270k, the Labor Department said today. However many analysts believe that seasonal adjustments around the Thanksgiving holiday contributed significantly to the bigger-than-expected drop. The four-week moving average of claims which removes week-to-week volatility, dropped by 21,000 to 252,250, which is the lowest since mid-March 2020 when the pandemic slammed the economy. Also continuing claims, which lags initial jobless claims data by one week,, dropped by 60,000 to 2.05 million, a fresh pandemic-era low which is another strong sign of the ongoing labor market recovery. 

Unexpectedly initial jobless claims dropped below 200k to the lowest level since 1969. Source: Bloomberg via ZeroHedge

The total number of people receiving some kind of unemployment benefit returned below 3 million. Source: Bloomberg via ZeroHedge

Today's data follow reports showing the fastest inflation in three decades and a pickup in job gains in October. Last NFP report showed payrolls increased 531k after solid upward revisions to the prior two months. Analysts expect that another 0.500k to be added in November, which will be reported on December 3. In previous months Fed Chair Powell stressed that the pace of the tapering process would depend on the labor market. If current trend continues and initial weekly claims remain below pre-pandemic levels, it would likely increase the chances that policymakers could accelerate their tapering of bond purchases and contemplate raising interest rates soon after that buying finishes in 2022.