Business World

Wednesday 23 August 2017

US jobless rate indicates economic growth remains robust

Donal O'Donovan

Donal O'Donovan

The number of Americans filing for unemployment benefits increased slightly last week, but remains at levels consistent with a tight labour market - a sign that the economy there continues to grow and is still adding jobs.

US President Donald Trump, under siege in Washington, held a raucous political rally in Iowa on Wednesday, where he touted job gains and an improving stock market as evidence that his economic policies are working.

He also lauded his choice of super-wealthy economic appointees such as his top economic adviser Gary Cohn, a former Goldman Sachs executive, and Commerce Secretary Wilbur Ross, a billionaire known for his investments in distressed assets, including Bank of Ireland.

"In those particular positions, I just don't want a poor person - does that make sense?" Trump asked supporters at the rally.

"All we do is win, win, win," he told the cheering crowd. Initial claims for US state unemployment benefits increased 3,000 to a seasonally adjusted 241,000 for the week ended June 17, the US Labour Department said on Thursday.

Economists polled by Reuters had forecast first-time applications for jobless claims rising to 240,000 in the latest week.

Following the report, the dollar held at slightly lower levels against a basket of currencies while US Treasuries were little changed.

Jobless claims for the prior week were revised upwards by 1,000 to 238,000 from 237,000.

The week's tally is the 120th consecutive week that claims have been below 300,000, the threshold associated with a strong jobs market.

It's the longest stretch that claims have remained below that level since 1970.

The four-week moving average of claims, which is considered a better measure of labour market trends as it smoothes week-to-week volatility, rose 1,500 to 244,750 last week, the highest since early April.

Many economists consider the US to be at or near full employment.

The unemployment rate in May declined to a 16-year low of 4.3pc.

The US Federal Reserve raised interest rates by a quarter percentage point last week for the second time in three months and signalled it remains on track for one more rate hike this year.

Fed officials have been buoyed by the tightening jobs market although it has yet to translate into significant pricing pressures within the economy - a sign wage growth may be lagging.

Indeed, some policymakers at the central bank have begun to show increasing concern that a recent pullback in inflation may point to sustained difficulty in returning it to the Fed's 2 percent target.

A Labour Department official said there were no special factors influencing the claims data.

Thursday's claims report also showed the number of people still receiving benefits after an initial week of aid increased 8,000 to 1.94 million in the week ended June 10.

The so-called continuing claims have now been below 2 million for 10 straight weeks, indicating diminishing labour market slack.

Despite concerns around some sectors, including US retail, leading economic index (LEI) - a gauge of forward-looking indicators - climbed in May, indicating that the growth will continue. (Additional reporting Reuters).

Irish Independent

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