US weekly jobless claims fall; labor market remains strong
Wholesale inventories unchanged in June
WASHINGTON, Aug 8, (RTRS): The number of Americans filing applications for unemployment benefits unexpectedly fell last week, suggesting the labor market remains strong even as the economy is slowing.
The jobless claims report from the Labor Department on Thursday, however, does not fully account for the impact of the recent escalation in the bitter trade war between the United States and China, which has led to an inversion of the US Treasury yield curve and raised the risk of a recession.
Worries about the trade war’s impact on the US economic expansion, the longest on record, prompted the Federal Reserve to cut interest rates last week for the first time since 2008. Financial markets have fully priced in another rate cut next month.
Expectations for a 50-basis-point cut at the Fed’s Sept 17-18 policy meeting have also risen.
“Initial claims have been sending a reasonably upbeat message about conditions in the labor market,” said Daniel Silver, an economist at JPMorgan in New York. “Today’s report likely doesn’t contain much information about the period since the recent escalations in trade tensions.”
Initial claims for state unemployment benefits declined 8,000 to a seasonally adjusted 209,000 for the week ended Aug. 3, the Labor Department said. Economists polled by Reuters had forecast claims would be unchanged at 215,000 in the latest week.
“The message of the unemployment claims data into early August is that layoff activity remained subdued and the labor market is still tight,” said John Ryding, chief economist at RDQ Economics in New York. “Though equity market volatility and low bond yields are driving pessimism about the economic outlook ... we would have to see initial claims sustain a rise to the 250,000 level to become concerned about recession.”
US stocks were trading higher as unexpectedly better Chinese data and a steadying of the yuan provided some comfort to investors rattled by the rise in US-China trade tensions. Prices of US Treasuries fell while the dollar was slightly stronger against a basket of currencies. Last week’s drop in claims pushed them to the lower end of their 193,000-244,000 range for this year. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, edged up 250 to 212,250 last week.