Tag Archives: Labor Department

U.S. data flow suggests economy regaining steam

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits unexpectedly rose last week, but the underlying trend continued to point to a strengthening labor market.

The labor market optimism was, however, dimmed somewhat by a survey on Thursday showing employment in the services industries fell in February for the first time in two years, even as the overall sector continued to expand.

But economists cautioned against reading too much into the drop, noting that past declines had not translated into overall labor market weakness.

“At first glance that is a concern … but we’ve seen this happen with the employment index before. There are also no other signs that service sector hiring is slowing,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 278,000 for the week ended Feb.27, the Labor Department said. Economists had forecast claims slipping to 271,000 in the latest week.

Claims have now been below the 300,000 threshold, which is associated with healthy labor market conditions, for a year. That is the longest period since the early 1970s. The four-week moving average of claims, seen as a bettermeasure of labor market trends, fell to the lowest level since late November – indicating no stress in the jobs market despite financial market conditions having tightened after fears of recession sparked a global stock market sell-off.

“Through some of the ups and downs in the weekly series, it looks like the trend in initial claims has improved over the past month, signaling that the labor market continues to improve despite weakness in several other recent economic reports,” said Daniel Silver, an economist at JPMorgan in New York.

The labor market’s resilience was reinforced by another report from global outplacement consultancy Challenger, Gray & Christmas Inc showing announced layoffs by U.S. companies tumbled 18 percent to 61,599 in February.

In a separate report, the Institute for Supply Management said its index of services industries employment fell 2.4 percentage points to a reading of 49.7 percent, dropping below the 50 threshold for the first since February 2014.

That contributed to the ISM’s nonmanufacturing index dipping 0.1 percentage point to a reading of 53.4 last month. A reading above 50 indicates expansion in the U.S. services sector, which accounts for more than two-thirds of the economy.

STRONG PAYROLLS EXPECTED

While the weak employment reading poses a risk to Friday’s jobs report for February, another survey from data firm Markit showed services industry employment held firm in February, though its overall services sector index fell to a near two-and-half year low, in part because of a blizzard that slammed the Northeast.

A report on Wednesday showed strong private sector hiring last month. According to a Reuters survey of economists, nonfarm payrolls likely increased by 190,000 jobs last month after rising 151,000 in January. The unemployment rate is seen steady at an eight-year low of 4.9 percent.

The dollar fell against a basket of currencies and U.S. stocks were trading modestly lower, also reflecting weaker oil prices. U.S. government debt rose marginally.

The encouraging labor market data joins reports on manufacturing and consumer spending in suggesting economic growth picked up at the start of the year after slowing to an annual rate of 1.0 percent in the fourth quarter.

In a fourth report, the Commerce Department said new orders for manufactured goods rebounded 1.6 percent after dropping 2.9 percent in December. That was the largest increase since June and followed two straight months of declines.

“It should be clear to most that the recession fears were overblown,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

The increase in factory orders was the latest suggestion that the worst of the factory slump was likely over.

Factory activity, which accounts for about 12 percent of the economy, has been slammed by a strong dollar and weak global demand, which have undercut exports. Spending cuts by energy firms in the wake of a plunge in oil prices are also a drag, as are efforts by businesses to reduce an inventory glut.

In another report, the Labor Department said nonfarm productivity fell at a 2.2 percent rate in the fourth quarter and not the 3.0 percent pace it reported last month. Still, labor-related costs increased solidly as companies employed more workers to raise output.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

U.S. unemployment rate hits eight-year low

WASHINGTON (Reuters) – U.S. employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but rising wages and an unemployment rate at an eight-year low suggested the labor market recovery remains firm.

Non-farm payrolls increased by 151,000 jobs and the unemployment rate slipped one-tenth of a percentage point to 4.9 percent, the lowest since February 2008, the Labor Department said on Friday. The payrolls gain was a sharp step-down from the average 231,000 jobs per month during the fourth quarter.

“The fact that payroll gains fell back to earth is not necessarily a bad sign. Most indications are that the job market in the U.S. is on solid footing and improving,” said Nariman Behravesh, chief economist at IHS in Lexington, Massachusetts.

Economists had forecast employment increasing by 190,000 in January and the jobless rate steady at 5 percent. The economy added 2,000 fewer jobs in November and December than previously reported.

On top of a 0.5 percent jump in average hourly earnings, which was the biggest gain in a year, employers increased hours for workers. Manufacturing, which has been undermined by a strong dollar and weak global demand, added the most jobs since August 2013.

Economists said the combination of strong wage growth and falling unemployment suggested a March interest rate increase from the Federal Reserve could not be completely ruled out.

The dollar rose against a basket of six major currencies on the data after hitting a roughly 15-week low on Thursday. Prices for U.S. government debt initially fell, but pared losses as stocks on Wall Street extended their decline.

“The lower unemployment rate and rising wages further support the view that the labor market is doing nothing but tightening,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Clearly, there are more uncertainties today than when the Fed raised rates in December and hinted that there could be four increases this year. But the labor market is absolutely not one of them.”

Tightening financial market conditions and signs that both the domestic and global economies were slowing had undercut the case for a Fed rate hike next month and lowered the probability of monetary policy tightening this year.

The U.S. central bank raised its short-term interest rate in December for the first time in nearly a decade.

Federal Reserve Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with growth in the working-age population.

The economy, especially voters’ perceptions of their job prospects, will likely be an issue in the November elections. President Barack Obama lauded the labor market progress.

“This progress is finally starting to translate into bigger paychecks. The United States of America right now has the strongest, most durable economy in the world,” Obama told reporters at the White House.

Republican National Committee chairman Reince Priebus, however, said the economy was “still failing the millions of Americans who have given up looking for work.”

WEATHER PAYBACK

January’s softer job gains were payback after the warmest temperatures in years bolstered hiring in weather-sensitive sectors like construction. January employment also lost the lift from the hiring of couriers and messengers, which was buoyed in November and December by strong online holiday sales.

The economy grew at a 0.7 percent annual rate in the fourth quarter, restrained by headwinds that included the strong dollar and efforts by businesses to sell off inventory.

A separate report from the Commerce Department showed the buoyant dollar cutting into exports in December, causing the trade deficit to widen 2.7 percent to $43.4 billion.

In January, the unemployment rate fell even as more people entered the labor force. The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job rose one-tenth of a percentage point to 62.7 percent. It remains near four-decade lows.

Low participation could crimp job growth as the supply of labor shrinks, unless a strong rise in wages lures more people back into the labor force. The private sector accounted for all employment gains in January, adding 158,000 positions.

The services sector created 118,000 jobs, the fewest in 10 months. That was because temporary help services fell 25,200 and courier and messenger employment declined by 14,400 jobs. Hiring in these categories normally rises during the holiday season.

Educational services lost 38,500 jobs, but retail payrolls added a strong 57,700 positions. Hiring could slow in the months ahead after a number of retailers, including Walmart <WMT.N> and Macy’s <M.N> announced dozens of store closures.

The embattled manufacturing sector surprisingly added 29,000 jobs last month, while mining laid off 7,000 more workers. Mining payrolls have decreased by 146,000 since peaking in September 2014. About three-fourths of the job losses over this period have been in support activities for mining.

Further losses are likely after a report on Thursday showed energy firms in January announced plans to lay off 20,246 workers. Oil prices have plunged about 70 percent in the last 18 months, forcing firms like oilfield services provider Schlumberger <SLB.N> to slash their workforces.

Construction payrolls rose 18,000, cooling off after adding 146,000 jobs in the fourth quarter. Government employment fell 7,000.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. jobless claims reach six-month high, spurring labor market worries

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits rose to a six-month high last week, suggesting some loss of momentum in the labor market amid a sharp economic slowdown and major stock market selloff.

Another report on Thursday showed factory activity in the mid-Atlantic region improved in January as shipments rebounded, but still contracted for a fifth straight month. That indicates national manufacturing activity remained in the doldrums at the start of this year.

Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 293,000 for the week ended Jan. 16, the highest reading since early July, the Labor Department said. It was the second straight week of gains and confounded economists’ expectations for a drop to 278,000.

“The picture does not look great. Unemployment claims need to come back down in a hurry to make us sure that the jobs market has not lost its edge,” said Chris Rupkey, chief economist at MUFG Union Bank.

While layoffs appear to have picked up a bit in recent weeks, the increases might not suggest a material weakening in labor market conditions as claims data is difficult to adjust around this time of the year.

Claims have now been below the 300,000 mark, which is associated with strong labor market conditions, for 46 straight weeks. That is the longest streak since the early 1970s.

The jump in claims came against the backdrop of a stock market rout that has seen the S&P 500 index drop 8.4 percent since Dec. 31.

At the same time, data on retail sales, exports, inventories and industrial production have suggested economic growth slowed abruptly at the end of 2015. The economy has been buffeted by the headwinds of a strong dollar, slowing global demand and relentless spending cuts in the energy sector.

An inventory overhang has also left businesses placing fewer new orders with factories, leading to predictions that fourth-quarter gross domestic product increased at an annual rate of less than 1 percent after expanding at a 2 percent pace in the July-September quarter.

Stocks on Wall Street were trading higher on European Central Bank President Mario Draghi’s comments that the ECB could “review and possibly reconsider” its monetary policy stance when it meets in March.

U.S. Treasuries fell marginally, while the dollar firmed to a two-week high against the euro.

OIL PAIN

The increase in jobless claims so far this month has been concentrated in oil-producing states like Texas, Louisiana and Alaska. Outside the energy, mining and manufacturing sectors, which have been devastated by a slump in crude oil prices and the impact of a strong dollar, layoffs have been generally low as the labor market approaches full employment.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 6,500 to 285,000 last week, the highest reading since mid-April.

The claims data covered the survey period for January nonfarm payrolls. The four-week average of claims rose 14,250 between the December and January survey periods. While that suggests a drop in payroll gains from December’s robust 292,000 jobs, employment growth in January is expected to top 200,000.

“Our first threshold of concern on payrolls would be a four-week average above 325,000, which would signal to us a significant pickup in layoff activity,” said John Ryding, chief economist at RDQ Economics in New York. “At this point, therefore, the rise in claims is not a concern to us, but we will be watching these data closely over the next few weeks.”

In a separate report, the Philadelphia Federal Reserve said its general activity index rose to -3.5 this month from a reading of -10.2 in December.

The new orders index remained negative, but increased 10 points to -1.4, while the shipments index increased 12 points, its first positive reading in four months. Factories in the mid-Atlantic region continued to report a drop in inventories, as well as shrinking order books and shorter delivery times.

“Slowing global growth and a strong dollar will continue to weigh on the manufacturing sector, but this report suggests lower odds of another sharp break downwards,” said Jesse Edgerton, an economist at JPMorgan in New York.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Number of Americans Applying for Unemployment Benefits Rises to Five Week High

There were more Americans applying for unemployment benefits last week.  Applications increased by 16,000 to 276,000 in the week ending October 31st.  

The Labor Department report showed the biggest advance since the end of February.  The four-week average of claims climbed from it’s lowest in four decades.  The total number of claims has not topped 300,000 since March.

Employers have been holding off on letting go of workers and attempting to adjust hiring plans instead in response to overseas economies.  

A jobs report from the labor department for the month of October is due to be released on  Friday and is projected to show job growth that’s a step down from the average so far this year.

According to Bloomberg the number of people continuing to receive jobless benefits increased by 17,000 to 2.16 million in the week ended Oct. 24.