U.S. Unemployment Falls as Manufacturing Gains
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Initial unemployment claims fell in the U.S. as one indicator of manufacturing activity showed a modest increase.
Weekly initial unemployment claims fell to 271,000, according to a new report by the Department of Labor. For the week ending November 14, seasonally adjusted initial claims fell by 5,000 from the prior week, while the 4-week moving average rose 3,000 from the previous week’s average. Unemployment claims have remained at a 4-week moving average of around 270,000 for most of 2015, making this week’s report roughly in-line with the year’s trend.
Initial unemployment claims fell in the U.S. as one indicator of manufacturing activity showed a modest increase.
Weekly initial unemployment claims fell to 271,000, according to a new report by the Department of Labor. For the week ending November 14, seasonally adjusted initial claims fell by 5,000 from the prior week, while the 4-week moving average rose 3,000 from the previous week’s average. Unemployment claims have remained at a 4-week moving average of around 270,000 for most of 2015, making this week’s report roughly in-line with the year’s trend.
Unemployment claims continued to fall throughout 2014 and 2015 in a trend that has persisted since the end of the Global Financial Crisis in late 2009. At that point, initial weekly unemployment claims rose to over 650,000, the highest level since 1983.
Variations by State
Some states are seeing a more robust employment condition while others are lagging behind, according to findings from the DOL.
New Jersey, Pennsylvania, Georgia, Texas, and New York saw the largest gains in initial unemployment claims, while actual decreases in claims were in Louisiana, Michigan, California, Arkansas, and Kentucky.
Newly discharged veterans also saw a decline in initial unemployment claims, which have fallen 33% from a year ago. Federal employees are filing more unemployment claims, indicating that continued cutbacks in government spending are impacting employment throughout the country.
Manufacturing Gains
While unemployment claims are falling in some states, one regional indicator suggests that manufacturing may be turning the corner and seeing actual growth for the first time in three months.
The diffusion index of the Philadelphia Fed Manufacturing Survey rose to its first positive reading in three months, which indicators a strengthening in manufacturing activity.
“Manufacturing conditions in the region showed slight improvement this month, according to firms responding to the November Manufacturing Business Outlook Survey. The indicator for general activity was slightly positive this month, following two months in negative territory,” the Philly Fed said in its report.
Analysts had expected a flat reading of this index, which would have indicated less improvement then the Fed actually witnessed. A pickup in manufacturing activity is not only in-line with improving jobless claims, but also supports an increase in inflation that hints at stronger aggregate demand. A recent study by the Census Bureau saw the consumer price index (CPI) rise to 2.5% year-over-year growth, while improvements in housing also indicate growing demand for manufacturing building materials.
If these trends continue, the Federal Reserve is likely to begin increasing its interest rate target after a recent FOMC release indicated that the Fed was preparing to make borrowing costs higher for Americans in an effort to control inflation and avoid a bubbling of activity.
