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U.S. jobs market holds firm; factory activity slows a bit
October 23, 2014 / 12:34 PM / 3 years ago

U.S. jobs market holds firm; factory activity slows a bit

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Richard O'Driscoll and his guide dog Maxwell leave the fourth Annual Job Fair for Individuals with Visual Impairments in Cambridge, Massachusetts October 16, 2014.Brian Snyder

WASHINGTON (Reuters) - New claims for U.S. unemployment benefits held below 300,000 for a sixth straight week last week, suggesting the labor market was shrugging off jitters over a slowing global economy.

Weakening growth in China and the euro zone, however, appears to be impacting the manufacturing sector, with other data on Thursday showing factory activity at a three-month low in early October. Even so, the sector was still moving forward at a healthy clip.

Initial claims for state unemployment benefits increased 17,000 to a seasonally adjusted 283,000 for the week ended Oct. 18, the Labor Department said. That followed three straight weeks of declines, which had pushed claims to levels last seen in 2000.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell to its lowest level since May 2000.

"There is no sign in these very timely data of weaker global growth or turmoil in the markets causing U.S. growth to falter," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.

Separately, financial data firm Markit said its preliminary U.S. manufacturing purchasing managers index fell to 56.2 this month from 57.5 in September. A reading above 50 signals expansion in economic activity.

New orders growth eased markedly, with new export sales slowing sharply. Job growth, however, remained fairly robust.

"The source of the slowdown appears to be weaker economic growth in key markets such as the euro zone, China and other emerging markets, which has hit export performance," said Chris Williamson, chief economist at Markit in London.

Slowing growth in the euro zone and China has caused turmoil on global financial markets in recent weeks. In stark contrast, U.S. activity is expanding at a healthy clip, with growth in the third quarter expected to top a 3 percent annual pace.

Strong October Payrolls Eyed

A third report showed a gauge of U.S. economic activity rebounded solidly in September after a flat reading in August.

"Economic growth in the U.S. remains healthy ... despite increasing global health concerns," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Prices for U.S. Treasury debt fell on the data, while the dollar was near a two-week high against the yen. U.S. stocks rose, also cheered by Caterpillar Inc (CAT.N) after the heavy machinery maker raised its full-year profit estimate.

The jobless claims data covered the week during which the government surveys businesses for its monthly reading on nonfarm payrolls.

The four-week average of new claims fell 18,750 between the September and October survey periods, pointing to another month of relatively strong employment growth after nonfarm payrolls increased by 248,000 in September.

The number of people still receiving benefits after an initial week of aid in the week ended Oct. 11 hit its lowest level since December 2000, suggesting the nation's jobless rate could drop further. It fell below 6 percent in September for the first time since July 2008.

Reporting by Lucia Mutikani; Editing by Paul Simao

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