Newsmax TV & Webwww.newsmax.comFREE - In Google Play
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
Tags: labor | market | factories | economy

Labor Market on Solid Ground as Mid-Atlantic Factories Sputter

Labor Market on Solid Ground as Mid-Atlantic Factories Sputter

Thursday, 19 December 2019 08:59 PM EST

The number of Americans filing applications for unemployment benefits dropped from a more than two-year high last week, pointing to sustained labor market strength that should continue to underpin consumer spending and the economy.

While other data on Thursday showed factory activity in the mid-Atlantic region almost stalling this month, manufacturers received more orders, increased shipments and boosted hours for employees. Their outlook for capital expenditure over the next six months was also upbeat, offering some tentative signs of stabilization in manufacturing amid an easing in tensions in the 17-month trade war between the United States and China.

The trade tensions have bruised business confidence and weighed on capital expenditure, leading to a downturn in national manufacturing activity. But a turnaround in manufacturing, which accounts for 11% of the economy, could be delayed. Boeing announced on Monday it would suspend production of its best-selling 737 MAX jetliner in January as fallout from two fatal crashes of the now-grounded aircraft drags into 2020.

Economists estimated that Boeing's biggest assembly-line halt in more than 20 years, which is expected to wreak havoc on supply chains, could cut first-quarter 2020 gross domestic product growth by at least half a percentage point.

"The economy isn't going off the rails here," said Chris Rupkey, chief economist at MUFG in New York. "But at the same time, it isn't setting any land speed records."

Initial claims for state unemployment benefits decreased 18,000 to a seasonally adjusted 234,000 for the week ended Dec. 14, the Labor Department said.

The drop, which only partially unwound the prior week's jump of 49,000, likely does not indicate a material shift in labor market conditions as claims data tend to be volatile in the period following the Thanksgiving Day holiday.

The surge in the week ended Dec. 7, which boosted claims to 252,000 - the highest reading since September 2017 - probably reflected a late Thanksgiving Day this year compared to 2018. That could have thrown off the model used by the government to strip out seasonal fluctuations from the data.

Economists polled by Reuters had forecast claims would fall to 225,000 in the latest week. They expect claims to remain elevated relative to October's low reading given volatility in the data around the holiday season and end of the year.

"At this point we are not concerned about the rise in initial claims and view it as a statistical quirk related to the seasonal adjustment process around Thanksgiving," said John Ryding, chief economist at RDQ Economics in New York.

A second report on Thursday from the National Association of Realtors showed existing home sales dropped 1.7% in November. Home resales, however, increased 2.7% from a year ago. The solid labor market and low mortgage rates are driving demand for housing.

The dollar was steady against a basket currencies, while prices for longer-dated U.S. Treasuries fell. Stocks on Wall Street were trading higher. Financial markets were unmoved by the impeachment late on Wednesday of President Donald Trump, who is unlikely to be removed from office.


The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 1,500 to 225,500 last week - still consistent with a strong labor market.

Last week's claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls component of December's employment report.

The four-week moving average of claims rose 4,250 between the November and December survey periods, suggesting some cooling in job growth. The economy added 266,000 jobs in November, the most in 10 months. The unemployment rate fell back to 3.5%, the lowest in nearly half a century.

Labor market strength is supporting consumer spending, keeping the economy on a moderate growth path despite headwinds from the trade tensions and slowing global growth.

In a third report on Thursday, the Philadelphia Federal Reserve said its business conditions index dropped to a reading of 0.3 in December from 10.4 in November. But there were increases in measures of new orders, unfilled orders, factory hours and shipments.

While manufacturers reported paying higher prices for raw materials and other inputs, they appeared unable to pass on the higher costs to consumers in a significant way.

The Philadelphia Fed survey's six-month business conditions index slipped to a reading of 35.2 this month from 35.8 in November. Its six-month capital expenditures index jumped to 27.6 from a reading of 19.4 in the prior month.

The mixed readings in manufacturing in the region that covers eastern Pennsylvania, southern New Jersey and Delaware mirror other measures on factory activity.

A survey from the New York Fed on Monday showed its business conditions index remaining subdued for the seventh consecutive month. Manufacturers were, however, optimistic about business conditions over the next six months.

"They (surveys) show little clear sign of the pronounced rebound in sentiment that we had hoped to see after recent developments on trade policy and strength in risky asset markets, but they have also shown little sign of further deterioration," said Jesse Edgerton, an economist at JPMorgan in New York.

© 2022 Thomson/Reuters. All rights reserved.

The number of Americans filing applications for unemployment benefits dropped from a more than two-year high last week, pointing to sustained labor market strength that should continue to underpin consumer spending and the economy.
labor, market, factories, economy
Thursday, 19 December 2019 08:59 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
Get Newsmax Text Alerts

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved
© Newsmax Media, Inc.
All Rights Reserved