Drop in jobless claims illustrates labour market strength

There are still areas of the labour market where conditions could be better, particularly the elevated number of part-time workers looking for full-time work and the lack of a meaningful acceleration in the growth rate of average hourly earnings. Nevertheless, the decline in initial jobless claims to well below 300,000 per week, which is almost unprecedented, illustrates that by some measures the labour market now appears to be in very good health. Moreover, as far as job hires are concerned, the recent surge in the rate of job openings is also very encouraging. Despite the recent financial market turbulence, we still think that diminishing labour market slack will prompt the Fed to begin raising interest rates in the first half of next year.