US Unemployment Rolls Smallest in 45 Years
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Thursday, the US economic data showed an acceleration in mid-Atlantic factory activity this month, with manufacturers saying they were boosting employment and asking for higher prices for their products.
The combination of a tightening labor market and firming inflation bolsters expectations the Fed will raise interest rates next month.
Initial claims for state unemployment benefits rose 11,000 to a seasonally adjusted 222,000 for the week ended 12 May, the Labor Department said.
Economists polled by Reuters had forecast claims rising to 215,000 in the latest week.
The labor market is viewed as being close to or at full employment, with the jobless rate near a 18 year low of 3.9% and within striking distance of the Fed’s forecast of 3.8% by the end of this year.
The number of people receiving benefits after an initial week of aid decreased 87,000 to 1.71-M in the week ended 5 May, the lowest mark since December 1973. Declining continuing claims underscore tightening labor market conditions and support economists’ expectations that wage growth will accelerate in 2-H of this year.
The labor market and regional factory data added to strong reports this week on consumer spending and industrial production in suggesting that economic growth was picking up early in Q-2 after slowing at the start of the year.
Expectations of strong job growth this month were bolstered by a separate report Thursday from the Philadelphia Fed which showed its manufacturing business outlook survey’s current general activity index rose about 11 pts to a reading of 34.4 in May.
Growth estimates for Q-2 are around a 3.0% annualized rate. The economy grew at a 2.3% rate in the January-March (Q-1) frame.
A report from the Conference Board Thursday showed its leading economic index, a gauge of future US economic activity, increased 0.4% in April after a similar gain in March. That indicates strong growth should continue into 2-H of the year.
Thursday, the major US stock market indexes finished at: DJIA -54.95 at 24713.98, NAS Comp -15.82 at 7382.48, S&P 500 -2.33 at 2720.13
Volume: Trade on the NYSE came in at 743-M/shares exchanged
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