WASHINGTON: The number of Americans filing applications for jobless benefits rose marginally from near a 49-year low last week, suggesting underlying strength in the labor market and broader economy.
While other data on Thursday showed a moderation in factory activity in the mid-Atlantic region in December, manufacturers hired more workers and were upbeat about business conditions over the next six months.
Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 214,000 for the week ended Dec. 15, the Labor Department said. Claims had dropped to 206,000 in the prior week, close to the 202,000 reached in mid-September, which was the lowest level since December 1969.
Economists polled by Reuters had forecast claims increasing to 216,000 in the latest week.
The Federal Reserve raised interest rates on Wednesday for the fourth time this year, but forecast fewer rate hikes next year and signaled its tightening cycle is nearing an end in the face of financial market volatility and slowing global growth.
The U.S. central bank said “the labor market has continued to strengthen,” and described job gains as having been “strong, on average, in recent months.”
The Labor Department said no claims were estimated last week. Claims have been volatile in recent weeks, with some economists saying an early Thanksgiving holiday had pulled forward seasonal layoffs, throwing off a model that the government uses to smooth the data for seasonal fluctuations.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,750 to 222,000 last week. A jump in filings to an eight-month high of 235,000 during the week ended Nov. 24 had stirred concerns the labor market was slowing.
U.S. financial markets were little moved by the data as investors digested the Fed’s interest rate decision and projections for monetary policy next year.
TIGHT LABOR MARKET
Last week’s claims data covered the survey period for the nonfarm payrolls component of December’s employment report. Claims fell 11,000 between the November and December survey weeks, suggesting some improvement in job growth this month.
Nonfarm payrolls increased by 155,000 jobs last month after surging by 237,000 in October.
November’s slowdown in job growth was largely blamed on a shortage of workers amid a tight labor market. The unemployment rate is near a 49-year low of 3.7 percent and not too far from the Fed’s forecast of 3.5 percent by the end of 2019.
Tightening labor market conditions are starting to push up wage growth, helping to underpin consumer spending. Growth estimates for the fourth quarter are around a 2.8 percent annualized rate. The economy grew at a 3.5 percent pace in the third quarter.
In a separate report on Thursday, the Philadelphia Fed said its business conditions index fell to a reading of 9.4 in December. That was the lowest level since August 2016 and followed a reading of 12.9 in November.
It said more than 26 percent of the manufacturers in the region reported increases in overall activity this month, while 17 percent reported decreases.
Manufacturers, however, continued to report overall higher employment, with 24 percent of the responding firms reporting hiring more workers this month, while 6 percent of the firms reported decreases in employment.
Businesses were upbeat about the next six months, with more than 43 percent of the firms expecting increases in activity, while 12 percent anticipated declines.