The number of Americans filing applications for unemployment increased less than expected last week, pointing to strong labor market conditions that should continue to support an economy growing at a moderate pace.
Other data on Thursday showed factory activity in the mid-Atlantic region slowed in September, but manufacturers in the region increased employment and boosted hours for workers.
The reports came a day after the Federal Reserve cut interest rates by another 25 basis points, citing risks to the longest economic expansion in history from a year-long U.S.-China trade war and slowing economic growth overseas.
Fed Chair Jerome Powell said on Wednesday he expected the economy, now in its 11th year of expansion, to continue to “expand at a moderate rate,” but noted trade tensions were “weighing on U.S. investment and exports.”
Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 208,000 for the week ended Sept. 14, the government said on Thursday. Economists polled by Reuters had forecast claims increasing to 213,00 in the latest week. The Labor Department said no states were estimated last week.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, dipped 750 to 212,250 last week.
Layoffs remain low despite the trade tensions, which have weighed on business investment and manufacturing. But there are concerns slowing job growth could take some shine off robust consumer spending, which is largely driving the economy.
Last week’s claims data covered the survey period for the nonfarm payrolls component of September’s employment report. The four-week moving average of claims fell 2,750 between the July and August survey periods suggesting a steady pace of job growth this month.
JOB GROWTH SLOWING
The economy created 130,000 jobs in August. Economists say it is unclear whether the loss of momentum in hiring is due to ebbing demand for labor or a shortage of qualified workers.
Job gains have averaged 158,000 per month this year, still above the roughly 100,000 per month needed to keep up with growth in the working age population.
U.S. financial markets were little moved by the data as investors continued to digest Powell’s post-meeting comments.
In a second report on Thursday, the Philadelphia Fed said its business conditions index fell to a reading of 12.0 in September from 16.8 in August. The survey’s measures of new orders dipped to 24.8 this month from 25.8.
Its measure of factory employment in the region that covers eastern Pennsylvania, southern New Jersey and Delaware jumped to a reading of 15.8 in September from 3.6 in the prior month. A gauge of the factory workweek increased to a reading of 13.0 from 6.8 in August.
Manufacturing, which makes up about 11 per cent of the economy, has shouldered the brunt of a one-year trade war between the United States and China. A survey from the New York Fed on Monday showed a measure of business activity in New York state slipped in September. Manufacturers in the region were also less upbeat about business conditions over the next six months, with a measure of capital expenditures dropping to a three-year low.
A measure of national manufacturing activity contracted in August for the first time in three years. The weakness in the surveys is in contrast with so-called hard data, which has suggested that manufacturing is stabilizing. Manufacturing production rebounded 0.5 per cent in August after falling 0.4 per cent in July, the Fed reported on Tuesday.
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