US job­less ben­e­fits in­crease beyond fore­cast

The Gulf Today - Business - - FRONT PAGE -

WASH­ING­TON: New ap­pli­ca­tions for US job­less ben­e­fits in­creased more than ex­pected last week, but the num­ber of Amer­i­cans on un­em­ploy­ment rolls fell to its low­est level since 1973, point­ing to di­min­ish­ing labour mar­ket slack.

Other data on Thurs­day showed an ac­cel­er­a­tion in mid-at­lantic fac­tory ac­tiv­ity this month, with man­u­fac­tur­ers say­ing they were boost­ing em­ploy­ment and ask­ing for higher prices for their prod­ucts. The com­bi­na­tion of a tight­en­ing labour mar­ket and firm­ing in­fla­tion bol­sters ex­pec­ta­tions the Fed­eral Re­serve will raise in­ter­est rates next month.

“The US labour mar­ket is headed to­ward be­com­ing the tight­est in re­cent mem­ory,” said Kathryn Asher, an economist at Moody’s An­a­lyt­ics in West Chester, Penn­syl­va­nia.

Ini­tial claims for state un­em­ploy­ment ben­e­fits rose 11,000 to a sea­son­ally ad­justed 222,000 for the week ended May 12, the La­bor Depart­ment said. Econ­o­mists polled by Reuters had fore­cast claims rising to 215,000 in the lat­est week.

The labour mar­ket is viewed as be­ing close to or at full em­ploy­ment, with the job­less rate near a 17-1/2-year low of 3.9 per cent and within strik­ing dis­tance of the Fed’s fore­cast of 3.8 per cent by the end of this year. The US cen­tral bank raised rates in March and fore­cast at least two more hikes for this year.

The num­ber of peo­ple re­ceiv­ing ben­e­fits af­ter an ini­tial week of aid de­creased 87,000 to 1.71 mil­lion in the week ended May 5, the low­est level since De­cem­ber 1973. De­clin­ing con­tin­u­ing claims un­der­score tight­en­ing labour mar­ket con­di­tions and sup­port econ­o­mists’ ex­pec­ta­tions that wage growth will ac­cel­er­ate in the sec­ond half of the year.

The labour mar­ket and re­gional fac­tory data added to strong re­ports this week on con­sumer spend­ing and in­dus­trial pro­duc­tion in sug­gest­ing that eco­nomic growth was pick­ing up early in the sec­ond quar­ter af­ter slow­ing at the start of the year.

Growth es­ti­mates for the sec­ond quar­ter are around a 3.0 per cent an­nu­al­ized rate. The econ­omy grew at a 2.3 per cent rate in the Jan­uary-march pe­riod.

A re­port from the Con­fer­ence Board on Thurs­day showed its lead­ing eco­nomic index, a gauge of fu­ture US eco­nomic ac­tiv­ity, in­creased 0.4 per cent in April af­ter a sim­i­lar gain in March. That in­di­cates strong growth should con­tinue into the sec­ond half of the year.

Job-seek­ers line up to ap­ply dur­ing a re­cruit­ment fair in New York.

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