US weekly jobless claims point to strong labour market

A store advertises that they are hiring in lower Manhattan, New York. — AFP pic
A store advertises that they are hiring in lower Manhattan, New York. — AFP pic

WASHINGTON, Jan 10 ― The number of Americans filing applications for benefits fell more than expected last week, pointing to sustained labour market strength that could further ease concerns about the economy’s health.

The report from the Labor Department today followed data last week showing employers hired the most workers in 10 months in December and increased wages for their workers.

Surveys showing steep declines in consumer and manufacturing activity in December had stoked fears that the economy was rapidly losing momentum.

“There are increasing risks and caution over the economic outlook in 2019, but jobless claims say the seas are calm and it looks to be smooth sailing for the economy for now,” said Chris Rupkey, chief economist at MUFG in New York.

Initial claims for state unemployment benefits fell 17,000 to a seasonally adjusted 216,000 for the week ended 5. Data for the prior week was revised up to show 2,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims declining to 225,000 in the latest week. The Labor Department said only claims for Puerto Rico were estimated last week.

US financial markets were little moved by the claims report.

Claims were boosted in the week ending December 29 as workers furloughed because of a partial shutdown of the US government applied for benefits. The federal government partially closed on December 22 as President Donald Trump demanded that the US Congress give him US$5.7 billion this year to help build a wall on the US border with Mexico.

The shutdown, which has affected a quarter of the government, including the Commerce Department, has left 800,000 employees furloughed or working without pay. Private contractors working for many government agencies are also without pay.

Federal worker claims rise

Claims by federal workers are reported separately and with a one-week lag. The number of federal employees filing for jobless benefits increased by 3,831 to 4,760 in the week ending December 29. Furloughed federal government workers can submit claims for unemployment benefits, but payment would depend on whether Congress decides to pay their salaries retroactively.

The four-week moving average of initial claims, considered a better measure of labour market trends as it irons out week-to-week volatility, rose 2,500 to 221,750 last week.

The economy created 312,000 jobs in December. The unemployment rate rose two-tenths of a per centage point to 3.9 per cent as some unemployed Americans piled into the labour market, confident of their job prospects.

While labour market strength has helped to calm fears that the economy, tighter financial market conditions and slowing could make the Federal Reserve cautious about raising interest rates this year.

Minutes of the US ’s December 18-19 policy meeting published on Wednesday showed “many” officials were of the view that the Fed “could afford to be patient about further policy firming.”

The Fed has forecast two this year. Fed Chairman Jerome Powell and several policymakers have said they would be patient and flexible in policy decisions this year.

Today’s claims report also showed the number of people receiving benefits after an initial week of aid fell 28,000 to 1.72 million for the week ended December 29. The four-week moving average of the so-called continuing claims increased 15,250 to 1.72 million.

November’s wholesale inventories report from the Commerce Department’s Census Bureau, which was scheduled for release today, will not be published because of the government shutdown. ― Reuters

Source: The Malay Mail Online

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