US: Labor market improving - Nomura

Analysts at Nomura note that US initial claims fell 5k to 229k for the week ending 28 October and continuing claims fell by 15k to 1884k for the week ending 21 October, the lowest since December 1973.

Key Quotes

“The initial unemployment insurance claims appear to have mostly stabilized after the recent hurricanes caused a temporary pick up. Overall, these readings are consistent with the labor market improving resiliently despite hurricane-related disruptions.”

“Nonfarm productivity: Nonfarm productivity increased 3.0% q-o-q saar in Q3, above expectations (Consensus: 2.6%), the strongest increase since Q3 2014. However, while this partially reflects the strong advanced estimate of real GDP growth during the quarter, aggregate hours during Q3 were relatively soft (increasing only 0.8% q-o-q saar), driving up nonfarm productivity. Part of the softness in hours is likely related to weather disruptions from the recent storms, so we might not expect similarly strong readings over the medium term. Unit labor costs increased 0.5% q-o-q saar, another somewhat weak reading. This is consistent with sluggish wage growth so far in 2017, albeit with some recent pick up in average hourly earnings.”