The number of Americans filing for unemployment benefits rose to a six-month high last week, suggesting some loss of momentum in the labour market amid a sharp economic slowdown and major stock market selloff.
Another report on Thursday showed factory activity in the mid-Atlantic region improved in January as shipments rebounded, but it was still contracting.
Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 293,000 for the week ended January 16th, the highest reading since early July, the Labor Department said. Economists polled by Reuters had forecast claims slipping to 278,000 in the latest week.
While layoffs appear to have picked up a bit in recent weeks, the increases might not suggest a material weakening in labour market conditions as claims data is difficult to adjust around this time of the year.
Claims have now been below the 300,000 mark, which is associated with strong labour market conditions, for 46 straight weeks. That is the longest streak since the early 1970s.
US stock index futures extended gains after the data and remarks by European Central Bank chief Mario Draghi, while prices for US Treasuries were flat. The dollar was stronger against a basket of currencies.
Economic headwinds
Outside the energy, mining and manufacturing sectors, which have been devastated by a slump in crude oil prices and a robust dollar, layoffs have been generally low as the labour market approaches full employment.
A Labor Department analyst said there were no special factors influencing the data and only claims for Puerto Rico and Wyoming had been estimated.
The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, rose 6,500 to 285,000 last week, the highest reading since mid-April.
The claims data covered the survey period for January nonfarm payrolls. The four-week average of claims rose 14,250 between the December and January survey periods.
While that suggests a drop in payroll gains from December’s robust 292,000 jobs, employment growth in January is expected to top 200,000.
The economy is struggling with the headwinds of the strong dollar, slowing global demand and relentless spending cuts in the energy sector, which have pressured manufacturing.
An inventory overhang has also left businesses placing fewer new orders with factories, leading to predictions that fourth-quarter gross domestic product increased at an annual rate of less than 1 percent after expanding at a 2 percent pace in the July-September quarter.
The claims report showed the number of people still receiving benefits after an initial week of aid fell 56,000 to 2.21 million in the week ended Jan. 9. The four-week average of the so-called continuing claims rose 3,250 to 2.23 million.
In a separate report, the Philadelphia Federal Reserve said its general activity index rose to -3.5 this month from a reading of -10.2 in December. The index has now been negative for five consecutive months.
The new orders index remained negative, but increased 10 points to -1.4, while the shipments index increased 12 points, its first positive reading in four months. Inventories at factories in the region continued to decline and firms also reported a drop in the backlog of unfilled orders and shorter delivery times.
Reuters
