US labour market, manufacturing data point to slowing economy

The number of Americans filing applications for unemployment benefits was unexpectedly unchanged at a five-month high last week, suggesting some softening in the labour market.

While other data on Thursday showed a mild pick-up in factory activity in the mid-Atlantic region this month, manufacturers reported a sharp slowdown in new orders, shipments and unfilled orders.

There were also declines in factory employment and hours measures. The persistent weakness in manufacturing is despite an easing in tensions in the 16-month trade war between the United States and China, which has depressed capital expenditure.

The reports added to last week's downbeat October retail sales and manufacturing output data in suggesting the economy lost speed in the fourth quarter. Slower growth was underscored by the third straight monthly decline in a gauge of future economic activity in October. But the risks of a recession in the near term are low as the housing market is rebounding from last year's soft patch, driven by lower mortgage rates.

The Federal Reserve last month cut interest rates for the third time this year and signalled a pause in the easing cycle that started in July when it reduced borrowing costs for the first time since 2008.

Initial claims for state unemployment benefits were flat at a seasonally adjusted 227,000 for the week ended Nov. 16, the highest level since June 22, the Labour Department said. Data for the prior week was revised to show 2,000 more claims received than previously reported.

While that would suggest little change in job gains this month, employment growth will be boosted by the return to payrolls of about 46,000 workers at General Motors. The 40-day strike at the automaker's plants in Michigan and Kentucky helped to hold back payrolls gains to 128,000 jobs in October.

Job growth has slowed this year, averaging 167,000 per month compared with an average monthly gain of 223,000 in 2018, in part because of the US-China trade spat, ebbing demand and a shortage of workers.

Troubles for manufacturing, which accounts for 11% of the economy, have persisted into the fourth quarter. In a separate report on Thursday, the Philadelphia Fed said its business conditions index rose to 10.4 in November from 5.6 in October.