Upbeat US figures highlight economy’s resilience
WASHINGTON ( Reuters) – New US applications for unemployment benefits fell last week while a gauge of US economic activity rebounded in October, signs of a healthy labor market and economy that could give the Federal Reserve confidence to raise interest rates next month.
Other data on Thursday showed factory activity in the mid-Atlantic region picked up slightly in November after two straight months of declines, another indication that the worst of the manufacturing rout was probably over.
Outside manufacturing, the economy has remained resilient despite faltering global growth.
“Business rolls on unperturbed by the China slowdown, sclerotic European growth or the commodity bust weighing on many emerging market nations, so it is time for the Fed to up the anchor on these very low interest rates,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.
Initial claims for state unemployment benefits slipped 5,000 to a seasonally adjusted 271,000 for the week ended Nov. 14, the Labor Department said. Claims have now held below the 300,000 mark for 37 consecutive weeks, the longest stretch in years, and are not too far from levels last seen in the early 1970s.
Claims below this level are usually associated with a healthy jobs market. Economists say there is little scope for claims to drop further as the labor market approaches full employment. The four-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, rose 3,000 to 270,750 last week.
The claims data covered the survey period for the nonfarm payrolls portion of the November employment report. The four-week average of claims rose 7,500 between the Octo- ber and November surveys, suggesting a pullback in job growth from October’s robust 271,000 gain.
“We view US labor market strength as very much intact and expect another month of solid job gains to pave the way for the Fed to raise rates in December,” said Jesse Hurwitz, an economist at Barclays in New York.
Minutes of the Fed policysetting committee’s Oct. 27-28 meeting published on Wednesday showed officials rallied behind a possible December increase in the US central bank’s benchmark overnight interest rate.
US stocks were slightly weaker, while Treasury prices rose. The dollar declined against a basket of currencies after four days of gains.
At five percent, the unemployment rate is in territory that many Fed officials see as consistent with full employment and the share of job seekers per open position is the lowest since 2007. Diminishing labor market slack is also highlighted by the shrinking ranks of the long-term unemployed.
The claims report showed the number of people still receiving benefits after an initial week of aid fell 2,000 to 2.18 million in the week ended Nov. 7.
The fairly robust labor market underscores the economy’s stamina in the face a strong dollar, energy spending cuts, an inventory overhang and slowing global growth, which have undercut factory activity.
In a separate report, the Conference Board said its leading economic index increased 0.6 percent last month after dipping 0.1 percent in both September and August. That suggests economic growth will accelerate from the third-quarter’s anemic 1.5 percent annualized pace.
A third report from the Philadelphia Federal Reserve showed its general activity index rose to 1.9 this month from -4.5 in October.