US jobless claims drop to near six-month low


US jobless claims drop to near six-month low
Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 232,000 for the week ended August 12.

Published: Thu 17 Aug 2017, 9:00 PM

Last updated: Thu 17 Aug 2017, 11:55 PM

The number of Americans filing for unemployment benefits fell to near a six-month low last week, pointing to a further tightening in the labour market that could encourage the Federal Reserve to lay out a plan to start unwinding its massive bond portfolio.
Labour market strength was corroborated by other data on Thursday showing manufacturers in the mid-Atlantic region sharply increased hours for workers in August amid a jump in new orders and unfilled orders.
Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 232,000 for the week ended August 12, the Labour Department said.
That was the lowest level since the week ended February 25 when claims fell to 227,000, which was the best reading since March 1973. Data for the prior week was unrevised.
It was the 128th week that claims remained below 300,000, a threshold associated with a robust labour market. That is the longest such stretch since 1970, when the labour market was smaller. The unemployment rate is 4.3 per cent.
Economists polled by Reuters had forecast claims dropping to 240,000 in the latest week. A Labour Department official said there were no special factors influencing the claims data and that no states 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, fell 500 to 240,500 last week.
Prices of US Treasuries were trading lower as were US stock index futures. The dollar was stronger against a basket of currencies.
Last week's claims data covered the survey week for the August nonfarm payrolls. The four-week average of claims fell 3,500 between the July and August survey periods, suggesting another month of solid job growth. - Reuters
Payrolls increased by 209,000 jobs in July. The economy has added 1.29 million jobs this year and the unemployment rate has fallen five-tenths of a per centage point.
Labour market tightness has, however, failed to generate strong wage growth, contributing to inflation consistently below the Fed's 2 per cent target.
Minutes of the US central bank's July 25-26 policy meeting showed policymakers appeared increasingly cautious about weak inflation, with some urging against further interest rate increases.
But labour market strength is probably sufficient for the Fed to outline a proposal to begin offloading its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities at its next policy meeting in September.
Most economists expect another rate hike in December. The Fed has increased borrowing costs twice this year.
In a second report on Thursday, the Philadelphia Fed said its index of manufacturing in the mid-Atlantic region slipped to 18.9 this month from 19.5 in July.
Despite the modest pullback, manufacturers reported increased demand for their products. The survey's measure of new orders surged to 20.4 from 2.1 in July. Firms also reported that shipments continued to rise.
As a result, workers put in more hours. The average workweek index increased to 18.8 in August from 3.8 in the prior month.
A third report from the Fed showed manufacturing output fell 0.1 per cent in July as the production of motor vehicles and parts tumbled 3.6 per cent. - Reuters

By Reuters

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