US job­less claims hit five-month low as la­bor mar­ket strength­ens

The Pak Banker - - 6BUSINESS -

WASH­ING­TON: The num­ber of Amer­i­cans fil­ing for un­em­ploy­ment ben­e­fits fell more than ex­pected last week, hit­ting its low­est level since Oc­to­ber, point­ing to sus­tained strength in the la­bor mar­ket that should fur­ther dis­pel fears of a re­ces­sion. Ini­tial claims for state un­em­ploy­ment ben­e­fits de­clined 18,000 to a sea­son­ally ad­justed 259,000 for the week ended March 5, the low­est read­ing since mid-Oc­to­ber, the La­bor Depart­ment said on Thurs­day. "The la­bor mar­ket con­tin­ues to be the light shin­ing through the foggy state of the global econ­omy ... the re­cent im­prove­ment in a host of eco­nomic data should pro­vide a bit of re­lief that the ex­pan­sion still has legs," said Jim Baird, chief in­vest­ment Of­fi­cer at Plante Mo­ran Fi­nan­cial Ad­vi­sors in Kala­ma­zoo, Michi­gan.

Job­less claims are be­ing watched for signs of la­bor mar­ket weak­ness fol­low­ing a re­cent mas­sive stock mar­ket sell-off that caused a tight­en­ing in fi­nan­cial mar­ket con­di­tions amid slow­ing global growth and fears the U.S. econ­omy was head­ing into re­ces­sion.

So far, the jobs mar­ket re­mains on strong foot­ing, with non­farm pay­rolls in­creas­ing by 242,000 jobs in Fe­bru­ary and the un­em­ploy­ment rate hold­ing at an eight-year low of 4.9 per­cent.

The re­ces­sion fears have also been soothed by strong con­sumer spend­ing at the start of the year, as well as signs of some sta­bi­liza­tion in the trou­bled man­u­fac­tur­ing sec­tor.

A tight­en­ing la­bor mar­ket and firm­ing in­fla­tion could see the Fed­eral Re­serve grad­u­ally rais­ing in­ter­est rates this year. The U.S. cen­tral bank hiked its bench­mark overnight in­ter­est rate in De­cem­ber for the first time in nearly a decade.

"A data de­pen­dent Fed should be fo­cused on th­ese de­vel­op­ments and see that the most up-to-date, high-fre­quency mea­sure of eco­nomic ac­tiv­ity in the U.S. shows no signs of slack­en­ing growth in re­sponse to mar­ket volatil­ity and de­vel­op­ments abroad," said John Ry­d­ing, chief econ­o­mist at RDQ Eco­nom­ics in New York. The Fed is, how­ever, not ex­pected to raise bor­row­ing costs at its meet­ing next week. U.S. stock were lit­tle changed af­ter open­ing higher fol­low­ing the Euro­pean Cen­tral Bank's de­ci­sion to lower key in­ter­est rates and ex­pand its bond pur­chase pro­gram in an ef­fort to stim­u­late growth in the euro zone.

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