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US jobless claims rise modestly, labor market firming

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The number of Americans filing for unemployment benefits rose less than expected last week, pointing to sustained strength in the labor market despite trade tensions.

[WASHINGTON] The number of Americans filing for unemployment benefits rose less than expected last week, pointing to sustained strength in the labor market despite trade tensions.

Initial claims for state unemployment benefits increased 1,000 to a seasonally adjusted 218,000 for the week ended July 28, the Labor Department said on Thursday. Claims dropped to 208,000 during the week ended July 14, which was the lowest reading since December 1969.

Economists polled by Reuters had forecast claims rising to 220,000 in the latest week. The labor market has remained robust despite trade tensions between the United States and its major trade partners, including China, Canada, Mexico and the European Union, which have hurt the stock market.

"Claims had started to move higher in mid-June, leading us to question whether it could be the fallout of protectionist measures," said Blerina Uruci, an economist at Barclays in Washington. "The decline over the past few weeks, however, suggests no such effect on labor markets yet."

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The Trump administration has imposed duties on steel and aluminum imports, provoking retaliation by the trade partners. It has also slapped 25 per cent tariffs on US$34 billion of Chinese imports. Beijing retaliated with matching tariffs on the same amount of US exports to China.

On Wednesday, President Donald Trump proposed a higher 25 per cent tariff on US$200 billion worth of Chinese imports.

Economists have warned that the tit-for-tat tariffs could disrupt the supply chain and weigh on manufacturing.

For now, the economy is on strong footing. The Federal Reserve on Wednesday left interest rates unchanged while offering an upbeat assessment of both the labor market and economy. The US central bank said "the labor market has continued to strengthen and economic activity has been rising at a strong rate."

The dollar held near two-week highs against a basket of currencies after the claims data. Prices for US Treasuries were trading higher. US stock index futures fell amid the escalating trade tensions.

The Labor Department said only claims for Maine 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, fell 3,500 to 214,500 last week, the lowest reading since mid-May.

The claims report also showed the number of people receiving benefits after an initial week of aid fell 23,000 to 1.72 million in the week ended July 21. The four-week moving average of the so-called continuing claims slipped 4,500 to 1.74 million.

REUTERS