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Jobless Claims Fall to Pandemic Low

by Adam Corbett | October 21, 2021

The Department of Labor said 290,000 people filed initial claims for unemployment insurance last week, beating polled economists’ expectations for a number closer to 298,000. The reading follows an increase of 293,000 in the prior week and marks the third consecutive decline. The number represents the lowest reading since March 14, 2020 – but remains higher than pre-pandemic averages.

In the week prior, continuing unemployment claims fell 122,000 to sit at 2.48 million – also the lowest levels recorded since March 21, 2020. With enhanced unemployment benefits fading away, some workers are being forced back into the labour market.

The beat in expectations should give market participants some relief: Stagflation headlines have dominated as of late, as investors have become more fearful of a high inflation/high unemployment combination. But with employment conditions continuing to improve, households sitting on hundreds of billions in excess savings, and a monster $2 trillion stimulus package on the table, growth prospects still look strong for the world’s largest economy.

Currency markets shrugged off the news, with the mighty dollar continuing to face selling pressures against its trade-weighted peers as global risk appetite improves.

A slew of European purchasing manager indices and Canadian retail sales are slated for release tomorrow, and next Wednesday’s Bank of Canada’s decision is beginning to impact trading in the loonie. With markets pricing in three or more rate hikes in 2022, the Canadian dollar is outperforming against the greenback – but could suffer a reversal if policymakers remain stubbornly dovish.

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