The number of Americans applying for unemployment benefits dropped to a 49-year low last week, but this may affect the health of the labor market.<\/p>\n
Labor market conditions remain strong, which at the moment could help ease fears of a sharp slowdown in economic growth. The economy is facing many difficulties, including a partial shutdown of the government for a month, which has begun to hurt both consumer and business confidence. Initial claims for unemployment benefits fell to 13,000 to 199,000 for the week ending Jan. 19, the lowest level since mid-November 1969 when 197,000 applications were registered.<\/p>\n
Experts in the labor and financial markets were forecasting a rise in unemployment claims to 220 thousand in the last week. The sudden drop in claims last week may affect the health of the labor market. The four-week moving average for initial claims, which is a better measure of labor market trends, has declined as the rate fluctuates from week to week.<\/p>\n
US Treasury yields hit session lows after data. US index futures were trading higher early in the morning, but fell after the Commerce Secretary said that the United States and China were far from resolving their trade dispute.<\/p>\n
The partial shutdown of the federal government seems to have limited impact on unemployment claims data. The number of federal workers applying for unemployment benefits rose to 25,420 in the week ending Jan. 12. Nearly a quarter of federal agencies have been closed since December 22, affecting 800,000 government employees, many of whom work without pay. All workers’ salaries will be paid retroactively when the shutdown ends.<\/p>\n
But experts expect the longest shutdown in history to raise the unemployment rate to above 4.0% in January, where workers seeking unemployment benefits will be considered unemployed. The unemployment rate rose by 20 points to 3.9% in December, as strong labor market conditions led some unemployed to return to the labor force. The claims report showed on Thursday that the number of people receiving benefits after an initial week of aid fell by about 24,000 to 1.71 million for the week ending Jan. 12.<\/p>\n
Continuous claims increased five to 1,000 points between December and January. If there is no government closure, the modest increase in claims between the survey weeks indicates a slight change in the unemployment rate this month. At this time, President Donald Trump is demanding $5.7 billion to build a wall along the US border with Mexico, with Democratic lawmakers refusing to provide funding for the wall.<\/p>\n
The publishing of data released by the Bureau of Economic Analysis has been suspended, leaving economists, investors, business and policy makers in a state of uncertainty about the health of the economy. Limited data available from independent institutions including the Federal Reserve indicate a slowdown in the economy in the fourth quarter and a continued loss of momentum in early 2019.<\/p>\n
Home resales fell in December and consumer confidence fell to more than a two-year low in January. Economists also estimate that the closure will bring at least two tenths of a percentage point of quarterly GDP growth per week. Some Wall Street banks, including JPMorgan and Barclays, have lowered their growth forecast for first quarter GDP to as low as 2.0% from a previous 3.0%.<\/p>\n","protected":false},"excerpt":{"rendered":"
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