WASHINGTON, Jan 17 — The number of Americans filing applications for jobless benefits unexpectedly fell last week, pointing to sustained labor market strength that should continue to underpin the economy.
Other data today showed factory activity in the mid-Atlantic region rebounded in January from near a 2-1/2-year low, driven by a surge in new orders. While manufacturers were also upbeat about business conditions over the next six months, they were slightly less optimistic about capital spending.
Initial claims for state unemployment benefits decreased 3,000 to a seasonally adjusted 213,000 for the week ended Jan. 12, the Labor Department said yesterday. Data for the prior week was unrevised.
Economists polled by Reuters had forecast claims rising to 220,000 in the latest week. The Labor Department said only claims for West Virginia were estimated last week.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, slipped 1,000 to 220,750 last week.
US stock index futures pared losses after the data while US Treasury yields pared declines. The dollar was flat against a basket of currencies.
The claims data covered the survey period for the nonfarm payrolls portion of January’s employment report.
The four-week average of claims fell 2,000 between the December and January survey periods. While that would suggest little change in labor market conditions after the economy created 312,000 jobs in December, an ongoing partial shutdown of the federal government raises the risk of a drop in payrolls.
Some 800,000 government workers missed their first paycheck last Friday because of the partial shutdown, which started on Dec. 22 as President Donald Trump demanded that Congress give him US$5.7 billion this year to help build a wall on the country’s border with Mexico.
The pay period for most federal employees that includes the week of Jan. 12 runs from Jan. 6 to Jan. 19. About 380,000 workers have been furloughed, while the rest are working without pay. Furloughed workers will probably be counted as unemployed.
“The federal government shutdown could make the payroll jobs number a walking disaster,” said Chris Rupkey, chief economist at MUFG in New York. “Payroll employment is likely to dive, dive, dive in January with perhaps 300 or 400 thousand jobs lost.”
Private contractors working for many government agencies are also without pay. The Trump administration has been recalling some employees to work without pay in an effort to minimize the effects of the shutdown.
The longest government shutdown in history has delayed the release of economic data compiled by the Commerce Department’s Bureau of Economic Analysis and Census Bureau, including the housing starts and building permits report, which was scheduled for release today.
November’s construction, factory orders and trade figures have also been delayed, as well as December retail sales and November business inventories data.
There is a risk the advance fourth-quarter gross domestic report due on Jan. 30 will not be published. The incomplete data is making it hard to get a clear read on the economy, which analysts warn could complicate policy decisions.
The Federal Reserve said yesterday in its Beige Book report, which offers a snapshot of the economy, that eight of the US central bank’s 12 districts reported “modest to moderate growth” in late December and early January.
The Fed noted that while outlooks generally remained positive, “many districts reported that contacts had become less optimistic.”
There are concerns that the impasse in Washington could hurt business sentiment and undercut capital spending.
In a separate report today, the Philadelphia Fed said its business conditions index increased to a reading of 17.0 in January from 9.1 in December, which was its lowest level since August 2016. The survey’s six-month business conditions index increased to a reading of 31.2 this month from 29.9 in December.
But its six-month capital expenditures index slipped to a reading of 31.6 in January from 34.5 in the prior month.
Despite the modest rebound in manufacturing in the region that covers eastern Pennsylvania, southern New Jersey and Delaware, there are signs that national factory activity slowed further early in the year after hitting a two-year low in December.
A report from the New York Fed earlier this week showed a second straight monthly drop in its Empire State manufacturing index in January. — Reuters
Source: The Malay Mail Online