The number of Americans filing for unemployment benefits rose modestly last week, suggesting sustained labor market strength that could help to support the economy amid risks from the coronavirus and weak business investment.
There was encouraging news on the struggling manufacturing sector, with other data on Thursday showing factory activity in the mid-Atlantic region accelerated to a three-year high in February, likely as tensions in the 19-month trade war between the United States and China diminished. Washington and China signed a Phase 1 trade deal in January.
Minutes of the Federal Reserve’s Jan. 28-29 meeting published on Wednesday showed policymakers “expected economic growth to continue at a moderate pace,” but expressed concern about possible economic risks from the coronavirus which has killed more than 2,000 people, mostly in China.
Initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 210,000 for the week ended Feb. 15, the Labor Department said. Economists polled by Reuters had forecast claims increasing to 210,000 in the latest week.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 3,250 to 209,000 last week.
U.S. financial markets were little moved by the data.
Solid labor market
The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls component of February’s employment report. Claims fell 13,000 between the January and February survey weeks, suggesting solid job growth this month.
The economy created 225,000 jobs in January after adding 147,000 positions in December. The unemployment rate rose one-tenth of a percentage point to 3.6% as more people entered the labor force, a sign of confidence in their job prospects.
Wednesday’s Fed’s minutes showed policymakers “judged that conditions in the labor market remained strong,” and “expected payroll employment to expand at a healthy pace this year.” Labor market momentum could slow this year, with job openings dropping to a two-year low in December.
In a separate report on Thursday, the Philadelphia Fed said its business conditions index jumped to a reading of 36.7 in February, the highest since February 2017, from 17.0 in January. The survey’s measure of new orders received by factories in the region that covers eastern Pennsylvania, southern New Jersey, and Delaware, soared to 33.6 this month from a reading of 18.2 in January.
But a measure of factory employment slipped. The survey came on the heels of a report from the New York Fed on Tuesday showing a measure of business activity in New York state jumped to a nine-month high in February.
Despite the signs of improvement the risks for manufacturing, which makes up about 11% of the economy, are stacked to the downside. Boeing last month suspended production of its troubled 737 MAX jetliner, grounded last March after two fatal crashes. Boeing’s biggest assembly-line halt in more than 20 years hurt industrial production in January.
The coronavirus outbreak, which has also infected thousands globally, is disrupting global supply chains. Apple warned on Monday it was unlikely to meet its March quarter sales guidance set just three weeks ago because of the coronavirus epidemic, which is delaying reopening of factories in China after the extended Lunar New Year holiday break.
The Philadelphia Fed survey’s six-month business conditions index increased to a reading of 45.4 this month from 38.4 in January. Its six-month capital expenditures index fell to 29.8 from a reading of 32.9 in the prior month.