New Unemployment Claims Hit 16-Year High

Unemployment Claims (Weekly) Actual 542k, Expected 508k, Previous 515k (Revised from 516k)

Release Explanation: This report provides the number of people claiming new unemployment benefits and the number of people who are continuing to claim unemployment benefits. Both metrics are provided in weekly and in 4-week moving average form. Very important that economic forecasts are based on the labor market. Economic strength builds from the willingness/confidence of firms to hire, without a strong labor market growth is hard to achieve. Over time the Employment Data will affect all economic releases, it does however take time for labor trends to form. A currency will strengthen or weaken in-line with the other releases that the Employment Data impacts, rather than as a knee-jerk reaction to these numbers printing. Economists tend to look more at the 4-week numbers because weekly numbers can be volatile although the market reacts to the headline numbers initially.

Trade Desk Thoughts: In the week ending Nov. 15 there were 542K new claims for unempoloyment benefits, an increase of 27k from the previous week's revised figure of 515,000 and the largest amount of new claims in 16 years. The 4-week moving average of initial claims was 506k, an increase of 15.7k from the previous week's revised average of 490k and the highest since the start of 1983. The seasonally adjusted insured unemployment rate was 3.0% for the week ending Nov. 8, an increase of 0.1 percentage point from the prior week's unrevised rate of 2.9%.

The number of workers continuing to claim benefits during the week ending Nov. 8 was 4.012M, an increase of 109k from last week's revised level of 3.903M, the most since December 1982. The 4-week moving average of continuing claims was 3.867M, an increase of 71.25k from the preceding week's revised average of 3.795M.

"The present slowdown may turn out to be the worst in the post-war era," said Matthew Carniol, chief currency strategist at TheLFB-forex.com. "We could end up seeing the unemployment rate up around 9% in the first half of 2009."

Forex Technical Reaction: S&P futures declined after the report to trade 1.6% lower for the day. The dollar gained on the pound and euro, and declined against the yen.

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