Low Unemployment May Lead Federal Reserve to Hike Interest Rates Soon
New applications for unemployment benefits in the United States remained near a 15-year low this week, while the average number of new claims rose 5,000 to a seasonally adjusted 267,750 over the past month, statistics from the U.S. Department of Labor revealed.
During the first week of November, the figure remained stagnant at 276,000, MarketWatch noted. The data, which the business publication dubbed an "exceedingly low level of claims," continues to indicate a steadily improving labor market.
Hiring accelerated in October to the highest level of the year, and the U.S. economy added 271,000 new jobs last month, as the unemployment rate slid to a 7-year low of 5 percent. The strong showing, meanwhile, may encourage the Federal Reserve to raise interest rates next month, Reuters predicted.
"The jobs market continues to do well," Ryan Sweet, a senior economist at Moody's Analytics in Westchester, Pennsylvania, told the newswire. "We are very close to hitting full employment and that suggests the Fed has the green light to start raising rates."
The U.S. central bank has kept its short-term interest rate near zero since December 2008, the height of the financial crisis that culminated in the bankruptcy of the global financial services firm Lehman Brothers and led to massive government bailouts of the U.S. financial industry.
Claims have been trending downward since 2009, and employers have been reluctant to lay off workers, which suggests that the labor market is getting tighter, The Wall Street Journal explained. Meanwhile, job openings -- a measure of labor demand -- increased 149,000 to 5.53 million in September, Reuters added.
Daniel Silver, an economist at J.P. Morgan Chase, however, cautioned his clients against excess enthusiasm, according to The Journal.
"The claims data from the most recent two weeks do not look bad and still look pretty favorable by the standards of this expansion," Silver wrote, "but they do suggest some weakening in the labor market relative to conditions reported through most of October."
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