WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits rose marginally last week, indicating the labor market remained on solid footing despite slowing economic growth.
Other data on Thursday showed manufacturing activity in the mid-Atlantic region slowed for a fourth straight month in March, hitting its lowest level in more than a year, while a gauge of future economic activity rose slightly in February.
Growth has slowed in the first quarter, undercut by a harsh winter, a strong dollar, weaker overseas economies and a now-settled labor dispute at West Coast ports. These are mostly temporary factors that should fade by the second quarter.
The Federal Reserve on Wednesday acknowledged the moderation in growth, but maintained its upbeat view of the jobs market, as it signaled it was nearing an interest rate increase by dropping the reference to being “patient” from the central bank’s so-called forward rate guidance.
“First-quarter growth will be lackluster due to the weather effects and other transitory issues. We do expect overall economic activity to rebound in the coming months and quarters,” said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
Initial claims for state unemployment benefits increased 1,000 to a seasonally adjusted 291,000 for the week ended March 14, the Labor Department said. The increase was broadly in line with economists’ expectations.
Claims have bounced around for much of the winter as harsh weather caused a swing in filings. But through the volatility, the trend remained consistent with a strengthening jobs market.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 2,250 to 304,750 last week.
Prices for U.S. Treasuries were trading lower, while the dollar rose against a basket of currencies. U.S. stocks fell as investors booked profits after Wednesday’s rally.
In a separate report, the Philadelphia Federal Reserve said its business activity index slipped to 5.0 in March, the lowest level since February of 2014. Last month’s reading was 5.2.
Any reading above zero indicates expansion in the region’s manufacturing. Manufacturers reported a slowdown in new order growth, as well as declines in unfilled orders and the average workweek for employees. Inventories and shipments also fell.
“Manufacturers may be uncertain about future demand following shocks from weather and port disruptions,” said Derek Lindsey, an analyst at BNP Paribas in New York.
Manufacturing also is under strain from a strong dollar, which has crimped the profits of multinational companies, and lower crude oil prices, which have caused oil companies to either delay or cut back on capital expenditure projects.
But the labor market remains bullish despite the impact of weather, the dollar and port disruptions.
The claims data covered the period during which the government surveyed employers for the March nonfarm payrolls report. Claims rose modestly between the February and March survey periods, leaving economists to expect another month of job growth above the 200,000 mark.
“As things stand, we would anticipate another sizeable gain in payroll employment in March which, despite the weakness of current inflation, is why we expect the Fed to begin raising interest rates in June,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.
The economy added 295,000 jobs in February, with the jobless rate falling to a more than 6-1/2-year low of 5.5 percent. February marked the 12th straight month that employment gains have been above 200,000, the longest such run since 1994.
The Fed on Wednesday said it would need to see “further improvement in the labor market” before tightening monetary policy.
Many economists believe the first rate hike since 2006 could come in June, though financial markets are pricing in a September move. The Fed has kept its short-term interest rate near zero since December of 2008.
In a separate report, the Commerce Department said the current account gap, which measures the flow of goods, services and investments into and out of the country, increased to $113.5 billion from $98.9 billion in the third quarter.
It was the largest shortfall since the second quarter of 2012 and reflected weak overseas profits and softening export growth due to the strong dollar.
The fourth-quarter current account deficit represented 2.6 percent of gross domestic product, the highest level since the fourth quarter of 2012, compared to 2.2 percent in the third quarter.
Reporting by Lucia Mutikani; Additional reporting by Dan Burns in New York; Editing by Paul Simao