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US jobless claims rise; layoffs at five-month low
[WASHINGTON] The number of Americans filing for unemployment benefits rose to near a three-month high last week, but remained below a level associated with tightening labor market conditions.
The strong labor market fundamentals were underscored by other data on Thursday showing planned job cuts by US-based employers dropped 31 per cent to a five-month low in October.
Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 265,000 for the week ended Oct 29, the highest level since early August, the Labour Department said. It was the 87th straight week that claims remained below 300,000, a threshold associated with a healthy labour market.
That is the longest stretch since 1970, when the labor market was much smaller. Economists had forecast first-time applications for jobless benefits unchanged at 258,000 in the latest week.
"US jobless claims remain supportive of labour market improvement," said Michael Gapen, chief economist at Barclays in New York.
The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, increased 4,750 to 257,750 last week.
The Federal Reserve on Wednesday held interest rates steady but said its monetary policy-setting committee "judges that the case for an increase in the federal funds rate has continued to strengthen." The US central bank is widely expected to increase its overnight benchmark interest rate in December, but the decision could depend on the outcome of the Nov 8 US presidential election.
The tightening of the race between Democratic candidate Hillary Clinton and her Republican rival Donald Trump has rattled financial markets. The Fed raised borrowing costs last December for the first time in nearly a decade.
On Wednesday, the central bank offered a fairly upbeat assessment of the labor market, inflation and the broader economy.
US stock index futures trimmed gains slightly after the release of Thursday's data, while US interest rate futures were largely unchanged. The dollar was weaker against a basket of currencies.
Last week's claims report has no bearing on October's employment report, which is scheduled for release on Friday, as it falls outside the survey period.
According to a Reuters survey of economists, nonfarm payrolls likely increased 175,000 last month after rising 151,000 in September. The unemployment rate is seen slipping one-tenth of a percentage point to 4.9 per cent.
Expectations of an upbeat October employment report were supported by a report on Thursday from global outplacement consultancy Challenger, Gray & Christmas showing employers announced 30,740 job cuts last month, down from 44,324 in September.
"This low monthly total is most likely due to the fact the economy is relatively healthy and that most employers don't see those conditions changing in the next three to six months," said John Challenger, chief executive officer of Challenger, Gray & Christmas.
Job cuts in October were concentrated in the computer industry, where employers announced 4,792 layoffs. Most of the computer job cuts came from HP Inc, which laid off another 4,000 workers last month. That was in addition to the 30,000 job cuts the company announced in 2015.
In another report, the Labour Department said nonfarm productivity, which measures hourly output per worker, rose at a 3.1 per cent annual rate. The increase ended three straight quarters of decline. Productivity fell at a 0.2 per cent rate in the second quarter, Productivity was, however, unchanged compared to the third quarter of 2015. Output per worker in the third quarter jumped at a 3.4 per cent rate, the fastest pace since the third quarter of 2014. That was up from the 1.6 per cent pace notched in the April-June period.
The increase in output came despite total hours worked rising only at a 0.3 per cent rate in the third quarter, slowing from a 1.7 per cent pace of increase in the second quarter. That reflected a drop in hours for the self-employed.
Unit labour costs, the price of labor per single unit of output, rose at a 0.3 per cent pace in the third quarter after increasing at a downwardly revised 3.9 per cent rate in the second quarter. Unit labour costs were previously reported to have increased at a 4.3 per cent rate in the second quarter.
Third-quarter unit labor costs rose at a 2.3 per cent rate compared to the same period of 2015.
Hourly compensation per hour increased at a 3.4 per cent rate in the third quarter after rising at a 3.7 per cent pace in the prior quarter. The strong quarterly increases suggest a pickup in wage growth. Hourly compensation rose at a 2.3 per cent rate from a year ago.