U.S. Jobless Claims Rise to 278,000

Jobless claims in the U.S. were higher than expected last week, but data still points to a firming labor market. A separate report released on Thursday showed that layoffs fell 18% in February, highlighting the labor market’s resilience.

Initial jobless claims rose 6,000 to 278,000 (seasonally adjusted) last week, according to the Labor Department. Economists were expecting claims to decline to 271,000.

Despite the uptick in unemployment claims, levels still remain below the 300,000 threshold associated with a healthy labor market.

The four-week moving average of claims dropped 1,750 to 270,250, its lowest level since November.

A separate report from Challenger, Gray& Christmas Inc., an outplacement consultancy, showed that 61,599 job cuts were announced by U.S. companies in February, much lower than the 75,114 cuts announced in January. According to the data, layoffs were centered in the energy sector, which has struggled due to the slump in crude oil prices. Roughly 25,051 job cuts in the energy sector were announced last month.

A third report dimmed the upbeat reports by showing that employment in the services sector had contracted in February for the first time since 2014.

ISM’s index of services industries employment dropped 2.4% to 49.7%. ISM’s non-manufacturing index slipped 0.1% to 53.4 in February.

The Labor Department will be releasing its comprehensive monthly jobs report on Friday. Economists are expecting nonfarm payrolls to have increased by 190,000 in February. The unemployment rate is holding steady at 4.9%, an 8-year low.

Other recent economic reports showed an uptick in consumer spending and manufacturing, which suggests that economic growth is starting to pick up at the start of the year after slowing in the fourth quarter.

The Commerce Department also released a report showing a 1.6% rebound in manufactured goods after falling 2.9% in December.

The rise in factory orders indicates that the worst of the factory slump may be over. Factory activity has been hammered by a stronger dollar and sluggish global demand.

Yet another report from the Labor Department showed that nonfarm productivity dropped by 2.2% in the fourth quarter. Despite this, labor-related costs rose due to companies hiring more workers to boost output.

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Daniel Simmons