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Three-month low in U.S. jobless claims offers hope for labor market
March 6, 2014 / 2:10 PM / 4 years ago

Three-month low in U.S. jobless claims offers hope for labor market

WASHINGTON (Reuters) - The number of Americans filing new claims for jobless benefits hit a three-month low last week, suggesting some strength in a labor market that has been hobbled by severe weather.

Job seekers stand in line to meet with prospective employers at a career fair in New York City, October 24, 2012. REUTERS/Mike Segar

Other data on Thursday showed a second straight monthly decline in factory orders in January, likely because unusually cold and snowy weather disrupted activity.

Initial claims for state unemployment benefits tumbled 26,000 to a seasonally adjusted 323,000, their lowest level since the end of November, the Labor Department said.

“Initial claims returned to a more normal level, consistent with healthy labor market conditions,” said Yelena Shulyatyeva, an economist at BNP Paribas in New York.

Stocks on Wall Street were trading high on the claims data, while prices for U.S. Treasury debt fell. The dollar rose against the yen, but fell versus the euro as the European Central Bank kept interest rates on hold.

The drop in first-time claims exceeded economists’ expectations and suggested labor market fundamentals remain relatively strong, despite other data that have shown cold temperatures dampened hiring in recent months.

A closely watched government report on employment due on Friday is expected to show weather weighed on jobs growth for a third straight month in February, although not as heavily as in the prior two months.

Nonfarm payrolls are forecast to have increased by 150,000 jobs in February, according to a Reuters survey of economists, up from gains of 113,000 in January and 75,000 in December. The claims data has no bearing on that report as it fell outside the survey’s reference period.

“The underlying level of payroll growth is around 200,000 per month,” said John Ryding, chief economist at RDQ Economics in New York. “The last two employment reports have not fully captured the underlying strength of the labor market and we expect a catch-up report at some point.”

A job-seeker completes an application at a career fair held by civil rights organization National Urban League as part of its annual conference, in Philadelphia July 25, 2013. REUTERS/Mark Makela


Freezing temperatures have also weighed on home building and retail sales. The Federal Reserve said on Wednesday severe weather had led to slower growth or outright contraction in some areas of the country in recent weeks.

It also appears to have been a drag on manufacturing in January.

The Commerce Department said new orders for manufactured goods declined 0.7 percent after falling 2.0 percent in December. Shipments fell for a second straight month.

Another report showed a sharp downward revision to business productivity in the fourth quarter, suggested firms may need to step up hiring soon to maintain output.

Productivity rose at a 1.8 percent annual rate instead of the previously reported 3.2 percent pace. It had increased at a 3.5 percent pace in the third quarter.

“Slower productivity might push employers to boost hiring,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.

Unit labor costs - a gauge of the labor-related cost for any given unit of output - were revised to show them falling at a 0.1 percent rate in the fourth quarter, indicating no wage-related inflation pressures in the economy.

They had previously been reported to have dropped at a 1.6 percent rate. They fell at a 2.1 percent rate in the third quarter.

Reporting by Lucia Mutikani; Editing by Andrea Ricci

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