US jobs data signal gradual improvement in economy
JOBLESS CLAIMS IN REGULAR STATE PROGRAMMES DECREASE TO 860,000
The number of Americans applying for jobless benefits resumed its decline, signalling a gradual improvement in the battered labour market.
Jobless claims in regular state programmes decreased by 33,000 to 860,000 in the week ended September 12, which coincides with the reference period for the government’s monthly jobs report, according to Labour Department figures released yesterday.
Continuing claims, the total number of Americans on state benefit rolls, fell by almost one million, to 12.6 million, in the week ended September 5.
Economists expected initial claims of 850,000 and continuing claims of 13 million, according to median estimates in a Bloomberg survey.
A welcome sign
The decline in the number of Americans seeking financial help after losing work — following a slight increase in the prior week — is a welcome sign that the economic rebound is still grinding forward despite a struggle to contain the coronavirus.
At the same time, overall claims remain historically high, and the continuing stalemate over a new round of federal stimulus is squeezing millions of people after supplemental benefits expired in July and another temporary program started to run out of funds.
Additional stimulus is “on life support for sure and if we’re not getting any additional benefits for households and replacement of lost wage and salary income, it does look like the pace of improvement is certainly going to slow,” Michael Gapen, chief US economist at Barclays Plc, said.
Gapen also pointed to retail sales data out on Wednesday as signalling “a lot less momentum” in the economy heading into the fourth quarter.
One caveat with the latest numbers is that the week included the Labour Day holiday, and the claims figures tend to be more volatile around holidays. On an unadjusted basis, state initial claims fell by about 76,000 to 790,000. US stock futures remained lower following the data, while 10-year Treasuries maintained gains.
Construction drop
A separate report yesterday showed US home construction starts fell more than forecast in August, representing a pause in momentum for a housing market that’s been a key source of fuel for the economy. Also, a measure of manufacturing in the Philadelphia region cooled slightly in September.
Federal Reserve Chairman Jerome Powell said while the central bank welcomes the drop in unemployment over the last four months, the jobless rate remains elevated.