Report shows improving labor market compatible with rising productivity
WASHINGTON – On Thursday, the Department of Labor (DOL) reported that the number of Americans filing first-time claims for unemployment benefits dropped to its lowest level in almost 3 years. In addition, the DOL reported that third quarter productivity grew at a break-neck annual rate of 8.1%.
On Friday, the DOL will release its employment report for the month of October. Some economists believe the economy added as many as 65,000 new jobs last month.
"Job gains alongside productivity gains is not a new or unexpected phenomenon, but follows a pattern that has substantial historical roots," said taxpayer advocate Grover Norquist, President of Americans for Tax Reform (ATR) in Washington D.C. "Productivity in the 1960\’s and 1980\’s exploded and millions of jobs were created in both decades; interestingly enough, there were also major tax cuts in both those decades. Today\’s report is perfectly consistent with the historical pattern of events following tax cuts."
Initial jobless claims for the week ending November 1 were 348,000, the lowest level since the week ending January 20, 2001, and much better than the 380,000 figure Wall Street forecast. Bolstered by last week\’s numbers, the four-week moving average of new claims, which smoothes out weekly fluctuations, dropped to 380,000, the fifth consecutive decrease and the lowest four-week average since March 2001. Economists consider weekly jobless claims below 400,000 to indicate a strengthening labor market.
On top of that news, the DOL reported that companies\’ output surged 8.8% in the third quarter—the fastest pace since late 1992—while unit labor costs fell by 4.6%, boding well for profit margins.
"Increasing productivity is essential for an economy\’s long-term health as it allows the economy to grow without triggering inflation," continued Norquist. "As productivity reduces costs and increases profits, businesses will start hiring new workers. This is what we are now seeing and is something that will continue for many years, as long as Americans are free to make it happen."