You are here
US labour market still strong; mid-Atlantic factory activity rebounds
[WASHINGTON] The number of Americans filing applications for unemployment benefits increased moderately last week, pointing to still strong labour market conditions despite signs that economic activity was slowing.
Other data on Thursday showed factory activity in the mid-Atlantic region rebounded sharply in July, offering hope for a struggling manufacturing sector.
Initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 216,000 for the week ended July 13, the Labour Department said, putting them in the middle of their 193,000-230,000 range for this year.
Data for the prior week was revised to show 1,000 fewer applications received than previously reported. Last week's increase in claims was in line with economists' expectations.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, dipped 250 to 218,750 last week.
The Labour Department said no claims were estimated last week. The claims data tends to be volatile around this time of the year because of summer factory closures, especially in the automobile industry, which occur at different periods.
This can throw off the model the government uses to strip out seasonal fluctuations from the data.
Layoffs remain low despite a bitter trade war between the United States and China, which has contributed to a dimming of the economy's outlook and led the Federal Reserve to signal it would cut interest rates at its July 30-31 meeting for the first time in a decade.
Last week's claims data covered the survey period for the nonfarm payrolls component of July's employment report. The four-week moving average of claims was little changed between the June and July survey periods, suggesting steady job growth this month. The economy created 224,000 jobs in June.
The dollar held losses against a basket of currencies after the data, while US Treasury yields edged higher.
While the labour market remains strong, there are concerns that a shortage of workers and the Trump administration's tougher stance on immigration could impede job growth.
The Fed's Beige Book report of anecdotal information on business activity collected from contacts nationwide published on Wednesday showed some manufacturing and information technology firms in the Northeast reduced their number of workers from mid-May through early July.
It said "a few reports highlighted concerns about securing and renewing work visas, flagging this as a source of uncertainty for continued employment growth."
Solid job growth is helping to underpin the economy, which is slowing as last year's massive stimulus from tax cuts and more government spending fades. Manufacturing is struggling, the trade deficit is widening again and the housing market remains weak, partially offsetting strong consumer spending.
Manufacturing, which makes up about 12 per cent of the economy, is being weighed down by weaker business investment, an inventory overhang, the trade war between the United States and China, and softening global growth.
But there are glimmers of hope for the sector. A separate report on Thursday from the Philadelphia Fed showed its business conditions index jumped to a reading of 21.8 in July from 0.3 in June. There were increases in measures of new orders, employment and shipments.
The improvement in manufacturing in the region that covers eastern Pennsylvania, southern New Jersey and Delaware mirrors other measures on factory activity. A survey from the New York Fed on Monday showed a rebound in its business conditions index this month after contracting in June.
Overall manufacturing production increased in June, the Fed reported on Tuesday. Output at factories, however, fell at a 2.2 per cent annual rate in the second quarter, the sharpest decline in three years, after shrinking at a 1.9 per cent pace in the first quarter.