Stocks quoted in this article:
The Labor Department reported today that U.S. jobless claims increased by 13,000 in the week ending September 9. Initial unemployment claims for the week totaled 324,000, the highest such level in 21 months. Today's increase was considerably ahead of an expected rise of only 4,000. The four-week average moved up to 318,500, also its highest level in 21 months.
In theory, tight labor markets cause demand to outpace supply, contributing to inflationary pressures. However, higher unemployment rolls may not be seen as a negative if it eases tightness in the labor markets. In fact, it may comfort market participants to know that labor-market tightness has been easing for five months.