The number of Americans filing applications for unemployment benefits fell more than expected last week, pointing to still strong labour market conditions, though the pace of job growth has slowed after last year’s robust gains.
Other data on Thursday showed a measure of factory activity in the mid-Atlantic region rebounding sharply this month after falling into negative territory in February for the first time in more than 2½ years.
But manufacturers were less upbeat about business conditions and capital spending over the next six months, supporting the view that the manufacturing sector is slowing in line with softening economic growth.
The Federal Reserve held interest rates steady on Wednesday and its policy-makers abandoned projections for further rate increases this year, noting that “growth of economic activity has slowed from its solid rate in the fourth quarter.”
Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 221,000 for the week ended March 16, the Labour Department said on Thursday. Data for the prior week were revised to show 1,000 more applications received than previously reported.
The Labour Department said no states were estimated. Economists polled by Reuters had forecast claims falling to 225,000 in the latest week. Claims have been drifting in the middle of their 200,000-253,000 range this year.
The four-week moving average of initial claims, considered a better measure of labour market trends as it irons out week-to-week volatility, rose 1,000 to 225,000 last week.
U.S. financial markets were little moved by the data as investors continued to digest the policy statement and macroeconomic projections released by the Fed on Wednesday.
JOB GROWTH SLOWING
The claims data covered the survey week for the non-farm payrolls portion of March’s employment. The four-week average of claims fell 11,000 between the February and March survey periods, suggesting a pickup in job growth after hiring almost stalled last month.
Non-farm payrolls increased by only 20,000 jobs in February, the fewest since September, 2017. The slowdown followed big gains in December and January. Average job growth has moderated to about 165,500 a month from 223,250 a month in 2018, reflecting a shortage of workers and softening economic growth as the stimulus from a US$1.5-trillion tax cut package fades.
A trade war between the United States and China, slowing global growth and uncertainty over Britain’s exit from the European Union are also hurting domestic economic activity.
In a separate report on Thursday, the Philadelphia Fed said its business conditions index jumped to 13.7 in March from minus 4.1 in February, which was the first negative reading since May, 2016. The survey’s measure of new orders received by factories in the region – which covers eastern Pennsylvania, southern New Jersey and Delaware – also rebounded from negative territory in February.
But the survey’s six-month business conditions index fell to a reading of 21.8 this month from 31.3 in February. Its six-month capital expenditures index slipped to a reading of 19.5 in March from 31.7 in the prior month.
These readings are in line with other surveys showing signs of slowing national factory activity. A report from the New York Fed last week showed a gauge of factory activity in New York State dropped to a two-year low in March.