The Trump Effect: US Jobs Growth Strong
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The number of Americans filing for unemployment benefits fell to a near 45-year low last week, pointing to strong job growth in February and solid momentum in the economy.
The economy’s brightening prospects were also underscored by other data Thursday showing a gauge of future economic activity increasing for a 4th month running in January.
Labor market strength should continue to underpin consumer spending, despite a drop in retail sales in January.
Initial claims for state unemployment benefits dropped 7,000 to a seasonally adjusted 222,000 for the week ended 17 February the Labor Department said on Thursday. Claims fell to 216,000 in mid-January, which was the lowest mark since January 1973.
Claims for 6 states, including California, were estimated because of Monday’s Presidents Day holiday. While that probably distorted last week’s data, the underlying trend in claims was consistent with a robust labor market.
Economists polled had forecast claims unchanged at 230,000 in the latest week.
It was the 155th straight week that claims remained below the 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since Y 1970, when the labor market was much smaller.
The labor market is near full employment, with the jobless rate at a 17-year low of 4.1 percent. Tightening labor market conditions are starting to push up wage growth, which could help to lift inflation toward the Federal Reserve 2% target.
The 4-week moving average of initial claims, considered a better measure of labor market trends as it irons out W-W volatility, fell 2,250 to 226,000 last week.
The claims data covered the survey period for the nonfarm payrolls component of February’s employment report. The four-week average of claims dropped 17,500 between the January and February survey weeks, suggesting solid job growth this month.
“With upbeat readings coming out of the initial claims data, we think job growth will likely be strong again in February,” said an economist at JPMorgan in New York.
Payrolls increased by 200,000 jobs in January. Strong employment gains in February would seal the case for an interest rate increase next month. The Fed has forecast three rate increases this year.
The claims report also showed the number of people receiving benefits after an initial week of aid declined 73,000 to 1.88-M in the week ended 10 February. The 4-week moving average of continuing claims fell 16,250 to 1.93-M.
Thursday, the major US stock market indexes finished at: DJIA +164.70 at 24962.48, NAS Comp -8.14 at 7210.09, S&P 500 +2.63 at 2703.96
Volume: Trade on the NYSE came in at: 835-M/shares exchanged
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