U.S. jobless claims fall more than expected; manufacturing constrained
The number of Americans filing for unemployment benefits fell more than expected last week, reinforcing views of labor market strength that could encourage the Federal Reserve to raise interest rates soon.
Another report on Thursday showed a modest improvement in manufacturing activity in the mid-Atlantic region this month amid rising shipments from factories. But weak new orders and shrinking order books suggested the manufacturing malaise was far from over.
Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 262,000 for the week ended Aug. 13, the Labor Department said. Claims for the prior week were unrevised.
Economists polled by Reuters had forecast initial claims slipping to 265,000 in the latest week.
Claims have now been below 300,000, a threshold associated with a strong labor market, for 76 straight weeks. That is the longest such stretch since 1973, when the labor market was much smaller.
The U.S. dollar extended losses after the data, while prices for U.S. Treasuries were largely unchanged. U.S. stock futures pared losses slightly.
The labor market is now viewed as either at or near full employment, suggesting limited scope for more declines in claims. Labor market buoyancy, marked by robust hiring in the last two months and diminishing slack, could prompt the Fed to raise interest rates despite low inflation and sluggish economic growth in the first half of the year.
New York Fed President William Dudley, an influential policymaker at the U.S. central bank, said on Tuesday it was “possible” to hike rates at the Fed’s Sept. 20-21 policy meeting.
But the minutes from the July 26-27 meeting, which were released on Wednesday, showed Fed policymakers were divided on the urgency of a rate hike amid concerns about benign inflation.
The minutes also noted that “some other members (of the Fed’s rate-setting committee) anticipated that economic conditions would soon warrant taking another step in removing policy accommodation.”
The Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade.
