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US weekly jobless claims increase; mid-Atlantic factory activity slows


WASHINGTON: The number of Americans filing applications for jobless benefits rose marginally from near a 49-year low last week, suggesting underlying strength in the labour market and broader economy.

While other data on Thursday showed factory activity in the mid-Atlantic region slowing to near a 2-1/2-year low in December, manufacturers reported hiring more workers and were upbeat about business conditions over the next six months.

Concerns are growing that tightening financial market conditions, partly the result of a relentless sell-off on Wall Street, could spill over into the labour market and economy. Economists said the weekly jobless claims data showed no sign that the financial market volatility was impacting on companies’ hiring decisions.

“This does not appear to be the case at present, and we still see the main signal from claims data as one of healthy labour market conditions,” said Michael Gapen, chief economist at Barclays in New York.

Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 214,000 for the week ended December 15, the Labour Department said. Claims had dropped to 206,000 in the prior week, close to the 202,000 reached in mid-September, which was the lowest level since December 1969.

Economists polled by Reuters had forecast claims increasing to 216,000 in the latest week.

The Federal Reserve raised interest rates on Wednesday for the fourth time this year, but forecast fewer rate hikes next year and signalled its tightening cycle is nearing an end in the face of financial market volatility and slowing global growth.

The US central bank said “the labour market has continued to strengthen,” and described job gains as having been “strong, on average, in recent months.”

The Labour Department said no claims were estimated last week. Claims have been volatile in recent weeks, with some economists saying an early Thanksgiving holiday had pulled forward seasonal layoffs, throwing off a model that the government uses to smooth the data for seasonal fluctuations.

The four-week moving average of initial claims, considered a better measure of labour market trends as it irons out week-to-week volatility, fell 2,750 to 222,000 last week. A jump in filings to an eight-month high of 235,000 during the week ended November 24 had stirred concerns the labour market was slowing.

US financial markets were little moved by the data as investors digested the Fed’s interest rate decision and projections for monetary policy next year. US Treasury yields fell to more than eight-month lows. The dollar dropped against a basket of currencies and US stocks were trading lower.

Nonfarm payrolls increased by 155,000 jobs last month after surging by 237,000 in October.

November’s slowdown in job growth was largely blamed on a shortage of workers amid a tight labour market. The unemployment rate is near a 49-year low of 3.7 per cent and not too far from the Fed’s forecast of 3.5 per cent by the end of 2019. Tightening labour market conditions are pushing up wage growth, helping to underpin consumer spending.

In a separate report on Thursday, the Philadelphia Fed said its business conditions index fell to a reading of 9.4 in December. That was the lowest level since August 2016 and followed a reading of 12.9 in November.

The moderation in manufacturing in the region that covers eastern Pennsylvania, southern New Jersey and Delaware is broadly in line with other data suggesting some softening in national factory activity amid slowing global demand. — Reuters

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