Last week, the initial demand in the United States unexpectedly dropped to its lowest level since January, indicating that even under the pressure of the Federal Reserve's repeated interest rate hikes, the labor market remains exceptionally hot.
Prior to the US stock market on Thursday (October 19th), data released by the US Department of Labor showed that in the week ending October 14th, the number of first-time applicants for unemployment benefits was 198000, a decrease of 13000 from the adjusted 211000 in the previous week. The market had originally expected it to rise to 212000.
The 198000 population is the lowest level since January 21st, and it is also the first time since January 28th that it has returned below the 200000 population level. This resulted in a four week average of 2057500 new applicants last week, and the previous week's four week average increased from 2062500 to 20675.
Since the summer of this year, the overall initial demand has been in a downward trend, but some economists are concerned that this situation will change sooner or later. The increasing number of layoffs announced by US companies in recent weeks may indicate that this downward trend will soon be reversed.
The report also shows that in the week ending October 7th, the number of consecutive applicants for unemployment benefits recorded 1.734 million, higher than the market expectation of 1.71 million and the previous week's 1.705 million.
Since March last year, in order to cool demand and curb inflation, the Federal Reserve has implemented 11 rate hikes, totaling 525 basis points. The target range of the federal funds rate has risen to 5.25% -5.5%, the highest level since 2001.
But even with such high borrowing costs, consumer spending and the labor market in the United States remain resilient. The market is anxiously waiting for Federal Reserve Chairman Powell's speech scheduled for later in the day, who may provide some guidance on the interest rate path.
Stephen Stanley, Chief Economist of Santander Capital Markets USA, wrote in a report, "Demand is slowing down, but it remains near historically strong levels, layoffs are far below normal, and the labor market is still hot
Some analysts believe that the United Auto Workers' (UAW) strike against Detroit's three major automakers may lead to an increase in initial application data released next week, as the three automakers have varying degrees of layoffs due to the impact of the one-month strike.