The most recent jobless claims report revealed a seven-week low in the current unemployment rate. For the week ended February 6, the number of Americans filing for jobless benefits fell by 16,000 to a seasonally adjusted 269,000, according to the Labor Department.
Millan Mulraine, the deputy head of U.S. research and strategy at TD Securities LLC in New York, thinks the job market is in somewhat of a curious spot right now. Hiring managers are confident about growth, but they are still hesitant as more signs emerge of a weakened global economy and continued financial market turmoil.
“They’re not going to have a hiring spree, because there’s still uncertainty. Neither are you going to have a firing binge anytime soon because there is still demand out there and businesses need to meet that demand.”
Considered a more accurate measure of job market trends, the four-week moving average of claims declined to 281,250 from 284,750 in the prior week. The drop may be an indication that Americans are more confident in the labor market, as the number of people voluntarily quitting their jobs hit a nine-year high in December.
As reported by Bloomberg, approximately 2.24 million people were receiving jobless benefits, a 21,000 drop for the week ended January 30. Meanwhile, the unemployment rate among people qualified for benefits fell to 1.6 percent from 1.7 percent.
According to the jobless claims report, payrolls increased 151,000 in January and the unemployment rate came in at 4.9 percent, the lowest in eight years. Hourly earnings also rose in response to a tightening labor market.
Yesterday, Federal Reserve Chair Janet Yellen cited that the slow growth of overseas markets, particularly the financial shakeup in China, may adversely affect economic expansion here in the U.S. She offered confidence that the Fed is closely watching for signs of any market volatility that could potentially disrupt U.S. employment and overall economic growth.
“Financial conditions in the United States have recently become less supportive of growth,” Yellen said in testimony Wednesday before the House Financial Services Committee. “These developments, if they prove persistent, could weigh on the outlook for economic activity and the labor market.”
Jobless claims have consistently been below 300,000 since March of last year. Many economists see this as a sign that the job market is strengthening.
“The economy might be sailing into a storm, the financial markets say, but if so, the U.S. economy is in a very strong position to weather whatever comes, with the labor market the strongest in decades,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.
As some uncertainty remains in the economy, labor experts expect hiring to remain slow throughout the rest of the year. However, most predict U.S. jobless claims will continue to fall and the unemployment rate to remain steady.
Approaching a 13-year low, oil prices plunged in response to an oversupply in the world’s crude inventory. According to the U.S. benchmark West Texas Intermediate, the price per barrel was sitting at $26.32 on Thursday, slightly higher than the previous low of $26.
Initially, oil prices rallied on Wednesday after the U.S. Department of Energy announced that oil supply in the U.S. declined about 800,000 barrels last week. However, the excitement died down as traders noticed gas supplies have increased, coupled with only a very small reduction in oil production.
Oil prices have also been under the influence of a report issued earlier this week by the Organization of the Petroleum Exporting Countries (OPEC), which revealed the cartel’s production increased by roughly 130,000 barrels a day in January. Shortly thereafter, the International Energy Agency projected that global oil supply will be greater than previously anticipated.
“With the fundamentals of an unrelenting oversupply still in place and the conflict of interest between OPEC members pumping record high levels… low oil prices may be here to stay for an extended period,” said Lukman Otunuga, an analyst with trading firm FXTM.
With weaker demand and higher production, oil is approaching a 13-year low and gas prices are likely to follow.
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