Weekly Unemployment Report Shows Strong Workforce

Jeremy Sandberg
By Jeremy Sandberg
December 28, 2018Business News

The weekly unemployment insurance report released on Dec. 27 shows signs of a strong labor market.

The number of new applications for benefits dropped during the week of Dec. 16 through Dec. 22, suggesting that the volatility in the stock market over the last month has not been affecting employment.

The Labor Department reported that initial claims had dropped by 1,000 to a seasonally adjusted 216,000 for the week ending Dec. 22.

Initial claims have fallen in three of the last four weeks and are near a 49-year low.

The Labor Department reported that the unemployment rate in November has stayed at 3.7 percent, a five-decade low, for the third straight month.

The U.S. economy has now added jobs for a record 98 consecutive months.

Historic Levels

Unemployment rates at historically low levels for a wide variety of groups have posed new challenges for businesses, as the 7 million open jobs now outnumber the ranks of just under 6 million unemployed.

The unemployment rate for men aged 20 and above fell last month to 3.3 percent—the lowest in 18 years. The rate for Americans with just high school diplomas dropped to 3.5 percent, the lowest since December 2000. The African-American jobless rate declined to 5.9 percent, matching May’s figure as the lowest on record.

Dow Jones Industrial Average after the close of trading on the floor of the New York Stock Exchange (NYSE)
A screen displays the Dow Jones Industrial Average after the close of trading on the floor of the New York Stock Exchange (NYSE) in N.Y. on Dec. 26, 2018. (Jeenah Moon/Reuters)

However, even with a strong economy, the possibility of layoffs exists. General Motors said last month it would cut up to 14,000 workers in North America in a restructuring move aimed at innovation, even though U.S. auto sales are near historic highs.

Volatile Stock Markets

In U.S. stock markets, major indices dropped throughout the day but those losses were reversed later in the day to close higher.

The Dow Jones Industrial Average went up 260.37 points, or 1.14 percent, to 23,138.82, the S&P 500 rose 21.13 points, or 0.86 percent, to 2,488.83 and the Nasdaq Composite gained 25.14 points, or 0.38 percent, to 6,579.49.

Markets in mainland China as well as Hong Kong closed weaker after data showed earnings at China’s industrial firms dropped in November for the first time in close to three years.

Brokerage in Tokyo, Japan
An electronic board showing Nikkei share average outside a brokerage in Tokyo, Japan on Dec. 27, 2018. (Kim Kyung-Hoon/Reuters)

The Shanghai composite fell 15.21 points, down 0.61 percent, to 2483.09, and the Hang Seng index dropped 172.50 points, or 0.67 percent, to 25478.88.

Trader Concerns

Some of the concerns about the economy have been provoked by a show of weakness in the housing market.

U.S. home prices rose just 0.3 percent in October, leaving the year-over-year increase at 5.7 percent. It is the smallest gain in more than two years, as shown in data from the U.S. Federal Housing Finance Agency released today.

Due to a partial shutdown of the federal government, some expected reports have been delayed, including a report on new home sales in November, revised figures on U.S. building permits, and advance economic indicators including the goods trade balance.

Prices of U.S. Treasury’s went up, with the 10-year note rising to yield 2.771 percent. Gold went up 0.4 percent to 1,278.10 an ounce.

The Federal Reserve raised interest rates four times this year but is predicting fewer rate hikes next year while signalling its tightening cycle is nearing an end in the face of financial market volatility and slowing global economic growth.

By Jason Lange. Additional reporting by Jeremy Sandberg

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