U.S. jobless claims miss forecasts, manufacturing grows at slowest pace in a year
(Reuters) – The number of Americans filing new claims for unemployment benefits fell less than expected last week, but a lingering backlog of applications in California makes it difficult to get a good read of labor market conditions.
While other data on Thursday showed manufacturing growing at its slowest pace in a year in early October, economists said fundamentals for the factory sector remained fairly healthy.
Initial claims for state unemployment benefits fell 12,000 to a seasonally adjusted 350,000, the Labor Department said.
“Underlying labor market conditions probably are not as bad as the recent claims data suggest,” said Daniel Silver, an economist at JPMorgan in New York.
Technical problems as California converted to a new computer system have distorted the claims data since September and a Labor Department analyst said claims from the backlog in California were still working their way through the system.
Economists, who had expected first-time applications to fall to 340,000 in the week ending October 19, say claims should drop back to levels consistent with a gradual labor market recovery once the backlog in California is cleared.
In a separate report, financial data firm Markit said its “flash,” or preliminary, U.S. manufacturing Purchasing Managers Index fell to 51.1, the lowest since October 2012, from 52.8 in September.
Output declined for the first time in more than four years, with the subindex dipping to 49.5 from 55.3. A reading below 50 indicates contraction.
While Markit suggested a 16-day partial federal government shutdown because of a budget impasse in Washington caused the slowdown in factory activity, economists were skeptical.
“I don’t think all the businesses tightened their reins during the shutdown. Some of them had expected the shutdown to be temporary and that turned out to be the case,” said Jacob Oubina, senior economist at RBC Capital Markets in New York.
The Markit survey has limited usefulness in trying to gauge the health of the U.S. manufacturing sector as it has only a short history, economists said.
