Jobs data set to encourage Fed tapering

The number of people filing for unemployment claims in the US last week amounted to 326k according to the US Labour Department.

08 October 2021

The number of people filing for unemployment claims in the US last week amounted to 326k according to the US Labour Department. This is against the 362k the previous week and below expectations of close to 350k. This is a continuation of the improving unemployment picture, which has now been in evidence for many months, will further encourage the Fed to decisively act next month in starting to taper its bond purchases. While the recovery in the jobs market continues, the fiscal stimulus schemes enacted during the height of the pandemic have now largely run off, encouraging workers to re-enter the workforce. The problem for many businesses is hiring quickly enough to cope with the massive demand build-up that followed the pandemic and while the improving jobs picture is encouraging, let’s not forget that these weekly figures (though declining) are still close to 150k more than pre-pandemic numbers. There is still a long way to go arguably before full employment and a frothy jobs market will push the Fed to switch to its other cooling tool – interest rate increases.