WASHINGTON — The number of Americans filing new claims for unemployment benefits fell unexpectedly last week, suggesting the labor market is expanding at a solid clip even as economic growth has stalled.
Sustained labor strength supports views that the sharp slowdown in activity is probably temporary. Several factors, including bad weather and a strong dollar, sucked momentum from the economy in the first quarter.
“While the economy has decelerated, the fundamentals remain strong, and the labor market points to a pickup in overall activity in the second quarter,” said Joe Brusuelas, chief economist at McGladrey in New York.
The economy, which has been hampered by weaker global demand and a now-settled labor dispute at the West Coast ports, as well as a strong dollar and a harsh winter, also was buoyed by an unexpected rise in factory orders in February.
In a separate report, the Commerce Department said new orders for manufactured goods increased 0.2 percent, ending six straight months of declines. Orders excluding transportation rose 0.8 percent. Orders for autos and auto parts fell 1.2 percent, and orders for private aircraft and aviation parts dropped 8.8 percent.
Tim Quinlan, a Wells Fargo Securities economist, said the “weakness in manufacturing has been overstated by a confluence of one-off factors,” like the labor dispute and the weather. He said he expected better data soon, “but today’s report wasn’t it.”
Downbeat first-quarter growth estimates got a lift from a second report from the Commerce Department showing the trade deficit narrowed 16.9 percent to $35.4 billion in February, the smallest since October 2009. When adjusted for inflation, the deficit narrowed to $50.8 billion in February from $54.6 billion in January.
Goldman Sachs raised its first-quarter growth forecast by three-tenths of a percentage point to a 1.0 percent rate, while the forecasting firm Macroeconomic Advisers lifted its estimate to a 1.2 percent rate from 0.9 percent.
The economy grew at a 2.2 percent rate in the fourth quarter. The buoyant dollar and sluggish global demand combined with greater domestic consumption suggest the smaller trade deficit is probably temporary.
“We will be looking for imports to pick up in the coming months, as consumer spending gains some momentum in the midst of rising employment levels,” said Anthony Karydakis, chief economic strategist at Miller Tabak in New York.
Initial claims for state unemployment benefits dropped 20,000 to a seasonally adjusted 268,000 for the week that ended March 28, the lowest level since January, the Labor Department said on Thursday. Economists had forecast claims at 285,000.
The four-week moving average of claims, considered a better measure of labor market trends because it irons out week-to-week volatility, fell 14,750 to 285,500.
“The claims numbers simply do not support the idea that the first quarter slowdown in growth is indicative of some underlying malaise in the economy,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The bullish labor market tone was also underscored by signs that more people are leaving the unemployment benefits rolls.
The number of people still receiving benefits after an initial week of aid fell 88,000 to 2.33 million in the week ended March 21, the lowest reading since December 2000.
The strong labor market, with an anticipated acceleration in consumer spending signaled by a surge in auto sales last month, should keep the Federal Reserve on track to start raising interest rates this year. The Fed has kept its short-term interest rate near zero since December 2008.
Prices for United States Treasury debt fell, while stocks on Wall Street rose. The dollar slipped against a basket of currencies.
While the claims figures have no bearing on Friday’s March employment report because they fall outside the survey period, they should help allay fears of a long-lasting moderation in growth.
Nonfarm payrolls most likely increased 245,000 last month, with the unemployment rate holding steady at a more than six-and-a-half-year low of 5.5 percent, according to a Reuters survey of economists.
nytimes.com
Sustained labor strength supports views that the sharp slowdown in activity is probably temporary. Several factors, including bad weather and a strong dollar, sucked momentum from the economy in the first quarter.
“While the economy has decelerated, the fundamentals remain strong, and the labor market points to a pickup in overall activity in the second quarter,” said Joe Brusuelas, chief economist at McGladrey in New York.
The economy, which has been hampered by weaker global demand and a now-settled labor dispute at the West Coast ports, as well as a strong dollar and a harsh winter, also was buoyed by an unexpected rise in factory orders in February.
In a separate report, the Commerce Department said new orders for manufactured goods increased 0.2 percent, ending six straight months of declines. Orders excluding transportation rose 0.8 percent. Orders for autos and auto parts fell 1.2 percent, and orders for private aircraft and aviation parts dropped 8.8 percent.
Tim Quinlan, a Wells Fargo Securities economist, said the “weakness in manufacturing has been overstated by a confluence of one-off factors,” like the labor dispute and the weather. He said he expected better data soon, “but today’s report wasn’t it.”
Downbeat first-quarter growth estimates got a lift from a second report from the Commerce Department showing the trade deficit narrowed 16.9 percent to $35.4 billion in February, the smallest since October 2009. When adjusted for inflation, the deficit narrowed to $50.8 billion in February from $54.6 billion in January.
Goldman Sachs raised its first-quarter growth forecast by three-tenths of a percentage point to a 1.0 percent rate, while the forecasting firm Macroeconomic Advisers lifted its estimate to a 1.2 percent rate from 0.9 percent.
The economy grew at a 2.2 percent rate in the fourth quarter. The buoyant dollar and sluggish global demand combined with greater domestic consumption suggest the smaller trade deficit is probably temporary.
“We will be looking for imports to pick up in the coming months, as consumer spending gains some momentum in the midst of rising employment levels,” said Anthony Karydakis, chief economic strategist at Miller Tabak in New York.
Initial claims for state unemployment benefits dropped 20,000 to a seasonally adjusted 268,000 for the week that ended March 28, the lowest level since January, the Labor Department said on Thursday. Economists had forecast claims at 285,000.
The four-week moving average of claims, considered a better measure of labor market trends because it irons out week-to-week volatility, fell 14,750 to 285,500.
“The claims numbers simply do not support the idea that the first quarter slowdown in growth is indicative of some underlying malaise in the economy,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The bullish labor market tone was also underscored by signs that more people are leaving the unemployment benefits rolls.
The number of people still receiving benefits after an initial week of aid fell 88,000 to 2.33 million in the week ended March 21, the lowest reading since December 2000.
The strong labor market, with an anticipated acceleration in consumer spending signaled by a surge in auto sales last month, should keep the Federal Reserve on track to start raising interest rates this year. The Fed has kept its short-term interest rate near zero since December 2008.
Prices for United States Treasury debt fell, while stocks on Wall Street rose. The dollar slipped against a basket of currencies.
While the claims figures have no bearing on Friday’s March employment report because they fall outside the survey period, they should help allay fears of a long-lasting moderation in growth.
Nonfarm payrolls most likely increased 245,000 last month, with the unemployment rate holding steady at a more than six-and-a-half-year low of 5.5 percent, according to a Reuters survey of economists.
nytimes.com
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