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U.S. jobless claims decline from five-month high

WASHINGTON, (Reuters) – The number of Americans filing for unemployment benefits fell from a five-month high last week, pointing to labor strength that underscores the economy’s sustained momentum.

Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 258,000 for the week ended Dec. 3, the Labor Department said on Thursday. Claims for the prior week were unrevised.

It was the 92nd straight week that claims were below 300,000, a threshold which is associated with a healthy labor market. That is the longest stretch since 1970, when the labor market was much smaller.

Economists polled by Reuters had forecast first-time applications for jobless benefits falling to 258,000 in the latest week. Claims hit a 43-year low in mid-November.

Economists had dismissed the recent back-to-back increases in filings, which had pushed claims to a five-month high, as an aberration. Claims tend to be volatile around this time of the year because of different timings of the Thanksgiving holiday.

A Labor Department analyst said there were no special factors influencing last week’s data and that no states had been estimated. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 1,000 to 252,500 last week.

The labor market is near full employment, with the government reporting last week that the unemployment rate fell to a nine-year low of 4.6 percent in November amid solid increases in nonfarm payrolls.

A tight labor market together with signs of a strengthening economy and steadily rising inflation will likely push the

Federal Reserve to hike interest rates at its Dec. 13-14 policy meeting. The U.S. central bank raised its benchmark overnight interest rate last December for the first time in nearly a decade.

Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid fell 79,000 to 2.01 million in the week ended Nov. 26. That followed two straight weekly increases.

The four-week average of the so-called continuing claims slipped 9,500 to 2.03 million.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. jobless claims rise to near three-month high

WASHINGTON, (Reuters) – – The number of Americans filing for unemployment benefits rose to near a three-month high last week, but remained below a level associated with a strong labor market.

Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 265,000 for the week ended Oct. 29, the highest level since early August, the Labor Department said on Thursday. Claims for the prior week were unrevised.

It was the 87th consecutive week that claims remained below 300,000, a threshold associated with a healthy labor market.

That is the longest stretch since 1970, when the labor market was much smaller.

Economists polled by Reuters had forecast first-time applications for jobless benefits would be unchanged at 258,000 in the latest week.

The Federal Reserve on Wednesday left interest rates steady but said its monetary policy-setting committee “judges that the case for an increase in the federal funds rate has continued to strengthen.”

The U.S. central bank is widely expected to increase its overnight benchmark interest rate in December, but the decision could depend on the outcome of the Nov. 8 U.S. presidential election.

The tightening of the race between Democratic candidate Hillary Clinton and her Republican rival Donald Trump has rattled financial markets. The Fed raised borrowing costs last December for the first time in nearly a decade.

On Wednesday, the central bank offered a fairly upbeat assessment of the labor market, inflation and the broader economy.

A Labor Department analyst said there were no special factors influencing last week’s data and that no states had been estimated. There was a surge last week in the unadjusted claims for Kentucky, California and Missouri.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, increased 4,750 to 257,750 last week.

The report has no bearing on October’s employment report, which is scheduled for release on Friday, as it falls outside the survey period. According to a Reuters survey of economists, nonfarm payrolls likely increased 175,000 last month after rising 151,000 in September.

The unemployment rate is seen slipping one-tenth of a percentage point to 4.9 percent.

Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid declined 14,000 to 2.03 million in the week ended Oct. 22, the lowest reading since June 2000.

The four-week average of the so-called continuing claims fell 9,000 to 2.04 million. That was the lowest level since July 2000.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Housing, medical care support U.S. underlying inflation

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. consumer prices moderated in May, but sustained increases in housing and healthcare costs kept underlying inflation supported, which could allow the Federal Reserve to raise interest rates this year.

While another report on Thursday showed an increase in the number of Americans applying for unemployment benefits last week, the trend remained consistent with a healthy labor market. The data came a day after the Fed downgraded its assessment of the jobs market and gave a mixed view of the economy.

The Labor Department said its Consumer Price Index increased 0.2 percent last month, slowing from April’s 0.4 percent rise. Gasoline prices rose modestly and the cost of food fell.

In the 12 months through May, the CPI gained 1.0 percent after advancing 1.1 percent in April.

Stripping out the volatile food and energy components, the so-called core CPI, increased 0.2 percent after a similar gain in April. That took the year-on-year core CPI rise to 2.2 percent from 2.1 percent in April.

Economists polled by Reuters had forecast the CPI gaining 0.3 percent last month and the core CPI rising 0.2 percent.

The Fed has a 2 percent inflation target and tracks an inflation measure which is currently at 1.6 percent. The U.S. central bank on Wednesday kept interest rates unchanged and said it expected inflation to remain below its target through 2017.

While the Fed signaled it still planned two rate hikes this year, there was less conviction, with six officials expecting only a single increase, up from one in March. The Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade.

The dollar extended losses against the yen on the data, while prices for U.S. government debt were little changed.

FOOD PRICES FALL

Last month, gasoline prices rose 2.3 percent after surging 8.1 percent in April. Food prices fell 0.2 percent, reversing the prior month’s increase.

Within the core CPI basket, housing and medical costs maintained their upward trend. Owners’ equivalent rent of primary residence rose 0.3 percent after rising by the same margin in April.

Medical care costs increased 0.3 percent after a similar gain in April. The cost of hospital services shot up 0.7 percent after rising 0.3 percent the prior month. Doctor visit costs rose 1.0 percent, but the cost of prescription medicine fell 0.4 percent after increasing 0.7 percent in April.

Apparel prices rose 0.8 percent. The cost of used cars and trucks dropped 1.3 percent, the biggest fall since March 2009. Prices for new motor vehicles fell 0.1 percent.

In a second report, the Labor Department said initial claims for state unemployment benefits increased 13,000 to a seasonally adjusted 277,000 for the week ended June 11.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, slipped 250 to 269,250 last week.

Jobless claims have now been below 300,000, a threshold associated with a strong job market, for 67 straight weeks, the longest streak since 1973. The Fed said on Wednesday “the pace of improvement in the labor market has slowed while growth in economic activity appears to have picked up.”

The U.S. central bank also noted that while the unemployment rate had declined, “job gains have diminished.”

But with job openings near record highs, both economists and Fed officials expect job growth to pick up after the economy added only 38,000 jobs in May, the smallest increase since September 2010.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. Retail sales strongly boost economic outlook

A man in short sleeves carries shopping bags near Herald Square during unseasonably warm weather in Manhattan

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. retail sales in April recorded their biggest increase in a year as Americans stepped up purchases of automobiles and a range of other goods, suggesting the economy was regaining momentum after growth almost stalled in the first quarter.

The jump in sales reported by the Commerce Department on Friday is a boost for the sector that has been hit by sluggish demand. It comes days after major retailers, including Macy’s and Nordstrom, reported sales tumbled in the first quarter and lowered their full-year profit forecasts.

“The retail sales report shows that recent claims of the demise of the U.S. consumer have been greatly exaggerated,” said Steve Murphy, a U.S. economist at Capital Economics in Toronto.

Retail sales surged 1.3 percent last month, the largest gain since March 2015, after dropping 0.3 percent in March. Excluding automobiles, gasoline, building materials and food services, retail sales shot up 0.9 percent last month after an upwardly revised 0.2 percent gain in March.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

They were previously reported to have gained 0.1 percent in March. Economists had forecast retail sales rising 0.8 percent and core retail sales gaining 0.3 percent last month.

Signs of an acceleration in consumer spending keep an interest rate hike from the Federal Reserve next month on the table.

“Today’s data materially strengthen the hand of those within the Fed for a rate increase in June but we remain doubtful as to whether this view will prevail, barring an especially robust employment report in early June,” said Anthony Karydakis, chief economic strategist at Miller Tabak in New York.

Consumer spending prospects got a boost from a separate report showing sentiment among households jumped to an 11-month high in early May.

The University of Michigan said its consumer sentiment index surged 6.8 points to 95.8 early this month, the highest reading since June. Sentiment increased among all income and age groups, with big gains among lower-income and younger households.

Last month’s strong core retail sales increase could prompt economists to raise their second-quarter GDP, currently hovering around a 2 percent annualized rate. Economic growth braked to a 0.5 percent pace in the first three months of the year after expanding at a 1.4 percent pace in the fourth quarter.

But another report from the Commerce Department on Friday showing a 0.4 percent increase in business inventories in March suggest growth was much higher than initially estimated.

Data on retail sales, construction spending and factory orders have already implied that the advance GDP growth estimate could be raised to a 0.9 percent rate when the government publishes its revision later this month.

The dollar rose against the euro and the yen after the data, while prices for U.S. government debt fell. U.S. stocks were trading lower.

Retail sales have been sluggish in part because the strengthening labor market has not generated strong wage growth.

Economists also say that some of the savings from cheaper gasoline over the past year-and-a-half have been absorbed by rising rents and medical care costs.

Macy’s, the largest department chain, said this week same-store sales fell 5.6 percent in the first quarter, and expected full-year sales to decline 3-4 percent.

Nordstrom reported that sales at stores open at least a year fell 1.7 percent in the first quarter. It cut its profit forecast for the year to $2.50-$2.70 per share from $3.10-$3.35.

The Commerce Department report showed retail sales in April rose across all categories, with the exception of building materials and garden equipment. Auto sales advanced 3.2 percent, the largest increase since March 2015, after slumping 3.2 percent in March.

Receipts at service stations increased 2.2 percent, reflecting recent increases in gasoline prices. Sales at clothing stores surged 1.0 percent, the largest increase since May 2015.

Online retail sales jumped 2.1 percent, the biggest gain since June 2014. Receipts at sporting goods and hobby stores rose 0.2 percent last month.

Sales at electronics and appliance outlets increased 0.5 percent. Building materials and garden equipment store receipts, however, fell 1.0 percent last month, the largest decline since August. Sales at restaurants and bars rose 0.3 percent.

In a separate report, the Labor Department said its producer price index climbed 0.2 percent last month after slipping 0.1 percent in March. In the 12 months through April, the PPI was unchanged after dipping 0.1 percent in March.

Inflation continues to be restrained by the lingering effects of the dollar’s surge and oil price plunge. The greenback gained 20 percent against the currencies of the United States’ trading partners between June 2014 and December 2015.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. jobless claims rise to more than one-year high

Job Seekers at Colorado Hospital Job Fair

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits unexpectedly rose last week, touching the highest level in more than a year, which could raise concerns about labor market health in the wake of the slowdown in job gains in April.

Initial claims for state unemployment benefits increased 20,000 to a seasonally adjusted 294,000 for the week ended May 7, the highest level since late February 2015, the Labor Department said on Thursday.

Claims for the prior week were unrevised. Economists polled by Reuters had forecast initial claims slipping to 270,000 in the latest week.

Despite last week’s jump, claims remained below 300,000, a threshold associated with healthy job market conditions, for 62 consecutive weeks, the longest stretch since 1973.

A Labor Department analyst said there were no special factors influencing last week’s claims data and no states had been estimated. There was a surge in claims in New York and Michigan in the latest week.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, increased 10,250 to 268,250 last week, the highest level in almost three months.

The claims report came on the heels of data last week showing nonfarm payrolls increased only 160,000 in April, the smallest gain in seven months, after advancing by 208,000 in March.

The labor market has been fairly robust despite a sharp slowdown in economic growth in the first quarter. The spike in jobless claims and moderation in employment gains likely do not suggest a deterioration given difficulties adjusting the data for seasonal fluctuations.

A report on Tuesday showed job openings hit an eight-month high in March, with the rate re-testing its post-recession high.

Thursday’s claims report showed the number of people still receiving benefits after an initial week of aid rose 37,000 to 2.16 million in the week ended April 30.

The four-week average of the so-called continuing claims fell 3,750 to 2.14 million, the lowest reading since November 2000.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. payrolls surge, bolster Fed rate hike prospects

WASHINGTON (Reuters) – U.S. employment gains surged in February, the clearest sign yet of labor market strength that could further ease fears the economy was heading into recession and allow the Federal Reserve to gradually raise interest rates this year.

Nonfarm payrolls increased by 242,000 jobs last month and 30,000 more jobs were added in December and January than previously reported, the Labor Department said on Friday. The unemployment rate held at an eight-year low of 4.9 percent even as more people piled into the labor market.

“Despite panic on Wall Street about impending recession, Main Street goes about its business as usual. This report will get the Fed’s attention, and raises the odds of another rate hike before too long,” said Scott Anderson, chief economist at Bank of the West in San Francisco.

The only blemish in the report was a three-cent drop in average hourly earnings, which in part reflected a calendar quirk and the proliferation of low-paying retail and restaurant jobs. The average length of the workweek also fell last month.

The employment report added to data such as consumer and business spending in suggesting the economy had regained momentum after growth slowed to a 1.0 percent annual rate in the fourth quarter.

Growth estimates for the first quarter are around a 2.5 percent rate, but risks are tilted to the downside after a report from the Commerce Department on Friday showed the trade deficit widened 2.2 percent to $45.7 billion in January.

Economists had forecast employment increasing by 190,000 last month and the jobless rate holding steady.

U.S. stocks were trading higher on the data, while prices for U.S. Treasury debt fell. The dollar slipped against a basket of currencies on concerns about wage growth.

Fears of recession in the wake of poor economic reports in December and slowing growth in China sparked a global stock market rout at the start of the year, causing financial market conditions to tighten.

Though financial markets have priced out bets of a rate hike at the Fed’s March 15-16 policy meeting, they now see a roughly 50 percent chance of an increase at the September and November meetings, according to CME FedWatch.

But economists believe the strong job market and improved growth outlook, together with signs that inflation is creeping up, could prompt the U.S. central bank to lift borrowing costs in June.

The Fed raised its key overnight interest rate in December for the first time in nearly a decade.

“The lack of a more marked pickup in wage growth is the only missing element,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto. “But as far as the Fed is concerned, it is already seeing a clear acceleration in core price inflation. A June rate hike is coming.”

EYE ON WAGES

Average hourly earnings dipped 0.1 percent in February, the first drop since December 2014, after spiking 0.5 percent in January. That lowered the year-on-year earnings gain to 2.2 percent from 2.5 percent in January.

The average workweek fell to a two-year low of 34.4 hours last month from 34.6 hours in January, but economists cautioned that the series tended to be volatile.

“If labor demand was really about to fall, why was there such a sharp rise in employment?” said Harm Bandholz, chief U.S. economist at UniCredit in New York.

With labor market slack being absorbed, wage growth is expected to accelerate.

A broad measure of unemployment that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment fell two-tenths of a percentage point to 9.7 percent, the lowest level since May 2008.

Fed Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with growth in the working-age population.

Also adding to the strong tone of the jobs report, the labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, increased two-tenths of a percentage point to 62.9 percent, the highest level in just over a year. The employment-to-population ratio hit its highest level since April 2009.

Job gains were almost broad-based in February, though manufacturing and mining employment fell. The services sector created 245,000 jobs after adding 153,000 jobs in January.

Mining shed a further 18,000 jobs after losing 9,000 positions in January. Mining payrolls have declined by 171,000 jobs since peaking in September 2014, with three-fourths of the losses in support activities.

More losses are likely after oilfield services provider Halliburton Co <HAL.N> said last month it would cut a further 5,000 jobs because of a prolonged slump in oil prices.

Manufacturing lost 16,000 jobs, reversing some of January’s surprise increase. Private education jobs rebounded after plunging in January. Construction payrolls increased 19,000 and government added 12,000 jobs.

Retail payrolls increased 54,900, adding to the 62,100 positions created in January. Leisure and hospitality jobs rose 48,000, with employment at restaurants and bars increasing by 40,200.

(Reporting by Lucia Mutikani; Editing by Clive McKeef and Paul Simao)

U.S. data flow suggests economy regaining steam

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits unexpectedly rose last week, but the underlying trend continued to point to a strengthening labor market.

The labor market optimism was, however, dimmed somewhat by a survey on Thursday showing employment in the services industries fell in February for the first time in two years, even as the overall sector continued to expand.

But economists cautioned against reading too much into the drop, noting that past declines had not translated into overall labor market weakness.

“At first glance that is a concern … but we’ve seen this happen with the employment index before. There are also no other signs that service sector hiring is slowing,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 278,000 for the week ended Feb.27, the Labor Department said. Economists had forecast claims slipping to 271,000 in the latest week.

Claims have now been below the 300,000 threshold, which is associated with healthy labor market conditions, for a year. That is the longest period since the early 1970s. The four-week moving average of claims, seen as a bettermeasure of labor market trends, fell to the lowest level since late November – indicating no stress in the jobs market despite financial market conditions having tightened after fears of recession sparked a global stock market sell-off.

“Through some of the ups and downs in the weekly series, it looks like the trend in initial claims has improved over the past month, signaling that the labor market continues to improve despite weakness in several other recent economic reports,” said Daniel Silver, an economist at JPMorgan in New York.

The labor market’s resilience was reinforced by another report from global outplacement consultancy Challenger, Gray & Christmas Inc showing announced layoffs by U.S. companies tumbled 18 percent to 61,599 in February.

In a separate report, the Institute for Supply Management said its index of services industries employment fell 2.4 percentage points to a reading of 49.7 percent, dropping below the 50 threshold for the first since February 2014.

That contributed to the ISM’s nonmanufacturing index dipping 0.1 percentage point to a reading of 53.4 last month. A reading above 50 indicates expansion in the U.S. services sector, which accounts for more than two-thirds of the economy.

STRONG PAYROLLS EXPECTED

While the weak employment reading poses a risk to Friday’s jobs report for February, another survey from data firm Markit showed services industry employment held firm in February, though its overall services sector index fell to a near two-and-half year low, in part because of a blizzard that slammed the Northeast.

A report on Wednesday showed strong private sector hiring last month. According to a Reuters survey of economists, nonfarm payrolls likely increased by 190,000 jobs last month after rising 151,000 in January. The unemployment rate is seen steady at an eight-year low of 4.9 percent.

The dollar fell against a basket of currencies and U.S. stocks were trading modestly lower, also reflecting weaker oil prices. U.S. government debt rose marginally.

The encouraging labor market data joins reports on manufacturing and consumer spending in suggesting economic growth picked up at the start of the year after slowing to an annual rate of 1.0 percent in the fourth quarter.

In a fourth report, the Commerce Department said new orders for manufactured goods rebounded 1.6 percent after dropping 2.9 percent in December. That was the largest increase since June and followed two straight months of declines.

“It should be clear to most that the recession fears were overblown,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

The increase in factory orders was the latest suggestion that the worst of the factory slump was likely over.

Factory activity, which accounts for about 12 percent of the economy, has been slammed by a strong dollar and weak global demand, which have undercut exports. Spending cuts by energy firms in the wake of a plunge in oil prices are also a drag, as are efforts by businesses to reduce an inventory glut.

In another report, the Labor Department said nonfarm productivity fell at a 2.2 percent rate in the fourth quarter and not the 3.0 percent pace it reported last month. Still, labor-related costs increased solidly as companies employed more workers to raise output.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

U.S. unemployment rate hits eight-year low

WASHINGTON (Reuters) – U.S. employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but rising wages and an unemployment rate at an eight-year low suggested the labor market recovery remains firm.

Non-farm payrolls increased by 151,000 jobs and the unemployment rate slipped one-tenth of a percentage point to 4.9 percent, the lowest since February 2008, the Labor Department said on Friday. The payrolls gain was a sharp step-down from the average 231,000 jobs per month during the fourth quarter.

“The fact that payroll gains fell back to earth is not necessarily a bad sign. Most indications are that the job market in the U.S. is on solid footing and improving,” said Nariman Behravesh, chief economist at IHS in Lexington, Massachusetts.

Economists had forecast employment increasing by 190,000 in January and the jobless rate steady at 5 percent. The economy added 2,000 fewer jobs in November and December than previously reported.

On top of a 0.5 percent jump in average hourly earnings, which was the biggest gain in a year, employers increased hours for workers. Manufacturing, which has been undermined by a strong dollar and weak global demand, added the most jobs since August 2013.

Economists said the combination of strong wage growth and falling unemployment suggested a March interest rate increase from the Federal Reserve could not be completely ruled out.

The dollar rose against a basket of six major currencies on the data after hitting a roughly 15-week low on Thursday. Prices for U.S. government debt initially fell, but pared losses as stocks on Wall Street extended their decline.

“The lower unemployment rate and rising wages further support the view that the labor market is doing nothing but tightening,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Clearly, there are more uncertainties today than when the Fed raised rates in December and hinted that there could be four increases this year. But the labor market is absolutely not one of them.”

Tightening financial market conditions and signs that both the domestic and global economies were slowing had undercut the case for a Fed rate hike next month and lowered the probability of monetary policy tightening this year.

The U.S. central bank raised its short-term interest rate in December for the first time in nearly a decade.

Federal Reserve Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with growth in the working-age population.

The economy, especially voters’ perceptions of their job prospects, will likely be an issue in the November elections. President Barack Obama lauded the labor market progress.

“This progress is finally starting to translate into bigger paychecks. The United States of America right now has the strongest, most durable economy in the world,” Obama told reporters at the White House.

Republican National Committee chairman Reince Priebus, however, said the economy was “still failing the millions of Americans who have given up looking for work.”

WEATHER PAYBACK

January’s softer job gains were payback after the warmest temperatures in years bolstered hiring in weather-sensitive sectors like construction. January employment also lost the lift from the hiring of couriers and messengers, which was buoyed in November and December by strong online holiday sales.

The economy grew at a 0.7 percent annual rate in the fourth quarter, restrained by headwinds that included the strong dollar and efforts by businesses to sell off inventory.

A separate report from the Commerce Department showed the buoyant dollar cutting into exports in December, causing the trade deficit to widen 2.7 percent to $43.4 billion.

In January, the unemployment rate fell even as more people entered the labor force. The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job rose one-tenth of a percentage point to 62.7 percent. It remains near four-decade lows.

Low participation could crimp job growth as the supply of labor shrinks, unless a strong rise in wages lures more people back into the labor force. The private sector accounted for all employment gains in January, adding 158,000 positions.

The services sector created 118,000 jobs, the fewest in 10 months. That was because temporary help services fell 25,200 and courier and messenger employment declined by 14,400 jobs. Hiring in these categories normally rises during the holiday season.

Educational services lost 38,500 jobs, but retail payrolls added a strong 57,700 positions. Hiring could slow in the months ahead after a number of retailers, including Walmart <WMT.N> and Macy’s <M.N> announced dozens of store closures.

The embattled manufacturing sector surprisingly added 29,000 jobs last month, while mining laid off 7,000 more workers. Mining payrolls have decreased by 146,000 since peaking in September 2014. About three-fourths of the job losses over this period have been in support activities for mining.

Further losses are likely after a report on Thursday showed energy firms in January announced plans to lay off 20,246 workers. Oil prices have plunged about 70 percent in the last 18 months, forcing firms like oilfield services provider Schlumberger <SLB.N> to slash their workforces.

Construction payrolls rose 18,000, cooling off after adding 146,000 jobs in the fourth quarter. Government employment fell 7,000.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. jobless claims reach six-month high, spurring labor market worries

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits rose to a six-month high last week, suggesting some loss of momentum in the labor market amid a sharp economic slowdown and major stock market selloff.

Another report on Thursday showed factory activity in the mid-Atlantic region improved in January as shipments rebounded, but still contracted for a fifth straight month. That indicates national manufacturing activity remained in the doldrums at the start of this year.

Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 293,000 for the week ended Jan. 16, the highest reading since early July, the Labor Department said. It was the second straight week of gains and confounded economists’ expectations for a drop to 278,000.

“The picture does not look great. Unemployment claims need to come back down in a hurry to make us sure that the jobs market has not lost its edge,” said Chris Rupkey, chief economist at MUFG Union Bank.

While layoffs appear to have picked up a bit in recent weeks, the increases might not suggest a material weakening in labor market conditions as claims data is difficult to adjust around this time of the year.

Claims have now been below the 300,000 mark, which is associated with strong labor market conditions, for 46 straight weeks. That is the longest streak since the early 1970s.

The jump in claims came against the backdrop of a stock market rout that has seen the S&P 500 index drop 8.4 percent since Dec. 31.

At the same time, data on retail sales, exports, inventories and industrial production have suggested economic growth slowed abruptly at the end of 2015. The economy has been buffeted by the headwinds of a strong dollar, slowing global demand and relentless spending cuts in the energy sector.

An inventory overhang has also left businesses placing fewer new orders with factories, leading to predictions that fourth-quarter gross domestic product increased at an annual rate of less than 1 percent after expanding at a 2 percent pace in the July-September quarter.

Stocks on Wall Street were trading higher on European Central Bank President Mario Draghi’s comments that the ECB could “review and possibly reconsider” its monetary policy stance when it meets in March.

U.S. Treasuries fell marginally, while the dollar firmed to a two-week high against the euro.

OIL PAIN

The increase in jobless claims so far this month has been concentrated in oil-producing states like Texas, Louisiana and Alaska. Outside the energy, mining and manufacturing sectors, which have been devastated by a slump in crude oil prices and the impact of a strong dollar, layoffs have been generally low as the labor market approaches full employment.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 6,500 to 285,000 last week, the highest reading since mid-April.

The claims data covered the survey period for January nonfarm payrolls. The four-week average of claims rose 14,250 between the December and January survey periods. While that suggests a drop in payroll gains from December’s robust 292,000 jobs, employment growth in January is expected to top 200,000.

“Our first threshold of concern on payrolls would be a four-week average above 325,000, which would signal to us a significant pickup in layoff activity,” said John Ryding, chief economist at RDQ Economics in New York. “At this point, therefore, the rise in claims is not a concern to us, but we will be watching these data closely over the next few weeks.”

In a separate report, the Philadelphia Federal Reserve said its general activity index rose to -3.5 this month from a reading of -10.2 in December.

The new orders index remained negative, but increased 10 points to -1.4, while the shipments index increased 12 points, its first positive reading in four months. Factories in the mid-Atlantic region continued to report a drop in inventories, as well as shrinking order books and shorter delivery times.

“Slowing global growth and a strong dollar will continue to weigh on the manufacturing sector, but this report suggests lower odds of another sharp break downwards,” said Jesse Edgerton, an economist at JPMorgan in New York.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Number of Americans Applying for Unemployment Benefits Rises to Five Week High

There were more Americans applying for unemployment benefits last week. Applications increased by 16,000 to 276,000 in the week ending October 31st.

The Labor Department report showed the biggest advance since the end of February. The four-week average of claims climbed from it’s lowest in four decades. The total number of claims has not topped 300,000 since March.

Employers have been holding off on letting go of workers and attempting to adjust hiring plans instead in response to overseas economies.

A jobs report from the labor department for the month of October is due to be released on Friday and is projected to show job growth that’s a step down from the average so far this year.

According to Bloomberg the number of people continuing to receive jobless benefits increased by 17,000 to 2.16 million in the week ended Oct. 24.

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