U.S. jobless claims rise last week, trend level still point to healthy labor market
Factory activity in the U.S. Midwest surged to its highest in almost 1-1/2 years in June amid strong gains in new orders and production, offering a ray of hope for the downtrodden manufacturing sector.
While another report on Thursday showed an increase in the number of Americans filing for unemployment benefits last week, layoffs remained low in June, backing views the labor market remained healthy despite last month’s paltry job gains.
The signs of stability in manufacturing and low layoffs added to consumer spending data in suggesting that economic growth regained speed in the second quarter.
But a cloud looms over the economy following Britain’s shock vote last week to leave the European Union. The so-called Brexit referendum unsettled markets and on Thursday, the International Monetary Fund said uncertainty over Britain’s departure was the biggest risk to the global economy.
“The unexpected Brexit decision could have material influence on how manufacturers view the near-term outlook. It could also impact firms’ hiring decisions over the coming months,” said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
The Institute for Supply Management-Chicago said its business barometer jumped 7.5 points to 56.8 this month, the highest since January 2015. The increase unwound the prior two months’ declines.
A gauge of new orders received by factories in the Midwest region surged to its highest since October 2014. A measure of backlogged orders was the highest in more than five years, after contracting for 16 consecutive months.
At the same time, manufacturers reported that production was at a five-year high and inventories were growing again.
U.S. stocks .SPX rose for a third straight day, in line with global markets. The dollar .DXY was little changed against a basket of currencies, while prices for U.S. government debt US10YT=RR rose.
