Weekly data on UI claims in the United States strengthen labor market prospects

WASHINGTON (Reuters) – New claims for unemployment benefits in the US declined last week and the number of Americans unemployed has returned to its 1973 level, suggesting a further tightening of the labor market. job.

Another report released Thursday by the Philadelphia Federal Reserve shows that manufacturers in the mid-Atlantic shoreline boosted employment and increased worker hours in October.

This, coupled with a robust economy, should probably allow the Federal Reserve to raise interest rates in December. The US central bank raised rates in September for the third time this year and removed the reference to monetary policy as "accommodative".

"The labor market is constrained by any quantitative measure and companies are holding back because of the difficulty of replacing workers," said John Ryding, chief economist at RDQ Economics in New York.

Initial claims for state unemployment benefits fell from 5,000 to 210,000 seasonally adjusted for the week ended Oct. 13, the Labor Department said. The number of claims fell to 202,000 during the week ended September 15th, which was the lowest level since November 1969.

Economists polled by Reuters had predicted a number of claims of 212,000 over the past week. The Labor Department said the North Carolina and South Carolina claims continued to be affected by Hurricane Florence, which flooded the area in mid-September. The claims for Florida were affected by Hurricane Michael.

The four-week moving average of initial claims, considered a better measure of labor market trends, as it reduces volatility week by week, increased from 2,000 to 211,750 last week.

Disaster data covered the period covered by the survey for the non-farm pay component of the October employment report. While the four-week rolling average of claims increased by 5,750 between the September and October survey periods, this did not change expectations of a recovery in job growth this month. after the decline in the payroll for restaurants and retail businesses in September.

"We believe that employment growth could rebound in October if the weakness of September's Hurricane Florence report reverses," said Daniel Silver, an economist at JPMorgan in New York.

The economy created 134,000 jobs in September, the lowest number in a year. The labor market is perceived as close to full employment or at full employment, with an unemployment rate close to 3.7%, its lowest level in 49 years. There is a record of 7.14 million open jobs.

REDUCTION OF UNEMPLOYMENT ROLLERS

The minutes of the September 25-26 Fed meeting released on Wednesday showed that policy makers "generally agreed that conditions (in the labor market) continued to improve" and were uniting. the need to raise interest rates further.

The dollar strengthened against a basket of currencies and US Treasury yields rose only slightly. Wall Street shares were trading down, also weighed down by a series of mediocre results reported by industrial companies.

Thursday's claims report also showed that the number of people receiving benefits after a first week of assistance fell from 13,000 to 1.64 million for the week ended Oct. 6, the lowest level since August 1973. The four-week moving average of so-called continuing claims plunged from 1,250 to 1.65 million, also the lowest level since August 1973.

In a separate report, the Philadelphia Fed said that employment in the region's factories – which covers eastern Pennsylvania, southern New Jersey and Delaware – had risen in October. He said that more than 30% of companies responding to the questionnaire reported an increase in their payroll this month.

The Philadelphia Fed employment index rose 2 points to 19.5 this month. Businesses also reported an increase in the number of hours worked. The index for the work week went from 14.6 in September to 20.8.

The market conditions index for the survey slipped to 22.2 in October from 22.9 in September as new orders fell. But companies have been optimistic about new orders over the next six months and many of them are expected to increase their capital spending in 2019.

Businesses also reported higher prices for their products, as the survey's price index rose 4.5 points in October to 24.1. Further price increases are expected over the next six months.

While more companies reported paying more for commodities this month, the survey's paid price index fell 1.4 points to 38.2. The price index paid had dropped 15 points in September. The survey results suggest that inflation could rise further in the coming months.

"The pricing power of companies will likely increase and inflation will accelerate," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.