Tag Archives: labor market

Yellen says Fed could raise interest rates ‘relatively soon’

U.S. Federal Reserve Chair Janet Yellen speaks at "The Elusive 'Great' Recovery: Causes and Implications for Future Business Cycle Dynamics" conference hosted by the Federal Reserve Bank of Boston in Boston, Massachusetts, U.S.,

WASHINGTON (Reuters) – The Federal Reserve could raise U.S. interest rates “relatively soon” if economic data keeps pointing to an improving labor market and rising inflation, Fed Chair Janet Yellen said on Thursday in a clear hint the U.S. central bank could hike next month.

Yellen said Fed policymakers at their meeting earlier in November judged that the case for a rate hike had strengthened.

“Such an increase could well become appropriate relatively soon,” Yellen said in prepared remarks that were her first public comments since the United States elected Republican Donald Trump to be the country’s next president.

Yellen, who was to deliver the remarks to Congress’s Joint Economic Committee at 10 a.m. ET on Thursday, said the economy appeared on track to grow moderately, which would help bring about full employment and push inflation toward the Fed’s 2 percent target.

Lawmakers on the committee, which includes members of both the House and Senate, will have an opportunity to question Yellen after she speaks.

The Fed chair gave a generally upbeat assessment of an economy that continues to generate jobs at a pace adequate to absorb new employees and keep others engaged in work. Wage growth “has stepped up,” Yellen said. Consumer spending, critical as the major component of U.S. gross domestic product, “continued to post moderate gains,” and help economic growth rebound from a weak first half. She said she expects firming in global growth, for months now considered a primary risk given weakness in Europe and China.

Indeed the major question mark for the Fed may now be the actions of the president-elect. His cabinet and policies are still taking shape. But the proposals outlined in his campaign could change the Fed’s baseline outlook substantially if he follows through on plans to cut taxes, roll out hundreds of billions of dollars in new infrastructure spending, and rip up free trade agreements.

Yellen did not mention the election in her prepared remarks. Other Fed officials in recent days have said a major change in fiscal policy could force them to shift gears if, for example, inflation begins to accelerate. But they also said they need to wait and see what the new administration proposes and what gets approved by the Republican-controlled Congress.

As it stands, Yellen said the current federal funds rate of between 0.25 and 0.5 percent is boosting economic activity, and that the country has “a bit more room to run” before inflation becomes much of a concern.

Right now, she said, “the risk of falling behind the curve in the near future appears limited,” and warrants only a gradual increase in the federal funds rate.

But that could shift, particularly as the new administration takes shape.

“The appropriate path for the federal funds rate will change in response to changes to the outlook,” Yellen said.

(Reporting by Jason Lange and Howard Schneider; Editing by Chizu Nomiyama)

U.S. jobless claims rise to near three-month high

WASHINGTON, (Reuters) – – The number of Americans filing for unemployment benefits rose to near a three-month high last week, but remained below a level associated with a strong labor market.

Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 265,000 for the week ended Oct. 29, the highest level since early August, the Labor Department said on Thursday. Claims for the prior week were unrevised.

It was the 87th consecutive week that claims remained below 300,000, a threshold associated with a healthy labor market.

That is the longest stretch since 1970, when the labor market was much smaller.

Economists polled by Reuters had forecast first-time applications for jobless benefits would be unchanged at 258,000 in the latest week.

The Federal Reserve on Wednesday left interest rates steady but said its monetary policy-setting committee “judges that the case for an increase in the federal funds rate has continued to strengthen.”

The U.S. central bank is widely expected to increase its overnight benchmark interest rate in December, but the decision could depend on the outcome of the Nov. 8 U.S. presidential election.

The tightening of the race between Democratic candidate Hillary Clinton and her Republican rival Donald Trump has rattled financial markets. The Fed raised borrowing costs last December for the first time in nearly a decade.

On Wednesday, the central bank offered a fairly upbeat assessment of the labor market, inflation and the broader economy.

A Labor Department analyst said there were no special factors influencing last week’s data and that no states had been estimated. There was a surge last week in the unadjusted claims for Kentucky, California and Missouri.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, increased 4,750 to 257,750 last week.

The report has no bearing on October’s employment report, which is scheduled for release on Friday, as it falls outside the survey period. According to a Reuters survey of economists, nonfarm payrolls likely increased 175,000 last month after rising 151,000 in September.

The unemployment rate is seen slipping one-tenth of a percentage point to 4.9 percent.

Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid declined 14,000 to 2.03 million in the week ended Oct. 22, the lowest reading since June 2000.

The four-week average of the so-called continuing claims fell 9,000 to 2.04 million. That was the lowest level since July 2000.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Drop in U.S. jobless claims point to labor market strength

Job seekers wait to talk to a recruiter at a health care job fair sponsored by the Colorado Hospital Association in Denver

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to sustained strength in the labor market despite a sharp slowdown in hiring last month.

Initial claims for state unemployment benefits declined 4,000 to a seasonally adjusted 264,000 for the week ended June 4, the Labor Department said on Thursday. Claims for the prior week were revised to show 1,000 more applications received than previously reported.

Economists polled by Reuters had forecast initial claims rising to 270,000 in the latest week. Claims have now been below 300,000, a threshold associated with a strong job market, for 66 straight weeks, the longest streak since 1973.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 7,500 to 269,500 last week.

A Labor Department analyst said there were no special factors influencing last week’s claims data. Only claims for Maryland were estimated.

The dollar held earlier gains versus a basket of currencies after the data, while prices for U.S. Treasuries dipped. U.S. stock futures pared losses.

The report was the latest indication that the labor market remains strong even though the economy added only 38,000 jobs in May, the smallest gain since September 2010. A report on Wednesday showed job openings hitting a nine-month high in April and layoffs falling to their lowest level since September 2014.

The health of the labor market will likely determine the timing of the next Federal Reserve interest rate increase.

Fed Chair Janet Yellen this week reiterated the U.S. central bank’s desire to raise rates, but gave no hints on when that might happen.

Before May’s dismal jobs report, Yellen had signaled rates would rise “in coming months” if economic data continued to suggest that growth was picking up in the second quarter. The Fed lifted its benchmark overnight interest rate in December for the first time in nearly a decade.

Thursday’s claims report showed the number of people still receiving benefits after an initial week of aid dropped 77,000 to 2.10 million in the week ended May 28, the lowest level since October 2000. The four-week average of the so-called continuing claims fell 17,500 to 2.15 million.

The insured unemployment rate fell one-tenth of a percentage point to a record low of 1.5 percent.

(Reporting by Lucia Mutikani; Editing by Paul Simao)