U.S. weekly jobless claims remain high as backlogs, layoffs linger

By Lucia Mutikani

WASHINGTON (Reuters) – Millions more Americans filed for unemployment benefits last week as backlogs continue to be cleared and disruptions from the novel coronavirus unleash a second wave of layoffs, pointing to another month of staggering job losses in May.

Initial claims for state unemployment benefits totaled a seasonally adjusted 2.438 million for the week ended May 16, the Labor Department said on Thursday. Data for the prior week was revised down to show 2.687 million claims filed instead of the previously reported 2.981 million. Connecticut said last week it had misreported its numbers.

Economists polled by Reuters had forecast claims would total 2.4 million in the latest week. The jobless claims report, the most timely data on the economy’s health, could offer early clues on how quickly businesses rehire workers as they reopen and on the success of the government’s Paycheck Protection Program (PPP).

A broad shutdown of the country in mid-March to contain the spread of COVID-19, the respiratory illness caused by the novel coronavirus, has resulted in the worst unemployment since the Great Depression.

“None of these states had systems set up to process the unprecedented amount of claims in one fell swoop, so there are backlogs,” said Steve Blitz, chief U.S. economist at TS Lombard in New York. “We continue to read of firms cutting their workforce and these are firms that were not immediately impacted by the mandated contraction from COVID-19.”

Claims have been gradually declining since hitting a record 6.867 million in the week ended March 28.

Economists said claims numbers were staying high also as states were now processing applications for gig workers and many others trying to access federal government benefits.

These workers generally do not qualify for regular unemployment insurance, but to get federal aid for coronavirus-related job and income losses they must first file for state benefits and be denied.

Last week’s claims data covered the week during which the government surveyed establishments for the non farm payrolls portion of May’s employment report. The economy lost a record 20.5 million jobs in April, on top of the 881,000 shed in March.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)

U.S. weekly jobless claims blow past 6 million mark

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing claims for unemployment benefits shot to a record high of more than 6 million last week as more jurisdictions enforced stay-at-home measures to curb the coronavirus pandemic, which economists say has pushed the economy into recession.

Thursday’s weekly jobless claims report from the Labor Department, the most timely data on the economy’s health, reinforced economists’ views that the longest employment boom in U.S. history probably ended in March.

Initial claims for state unemployment benefits surged 3.341 million to a seasonally adjusted 6.648 million for the week ended March 28, the government said. Data for the prior week was revised to show 24,000 more applications received than previously reported, lifting the number to 3.307 million.

Economists polled by Reuters had forecast claims would jump to 3.50 million in the latest week, though estimates were as high as 5.25 million.

“Similar to last week’s unemployment claims numbers, today’s report reflects the sacrifices American workers are making for their families, neighbors, and country in order to slow the spread,” U.S. Labor Secretary Eugene Scalia said in a statement.

The United States has the highest number of confirmed cases of COVID-19, the respiratory illness caused by the virus, with more than 214,000 people infected. Nearly 5,000 people in the country have died from the illness, according to a Reuters tally.

The dollar <.DXY> was little changed against a basket of currencies. U.S Treasury prices were trading higher while U.S. stock index futures pared gains.

GENEROUS PROVISIONS

Applications for unemployment benefits peaked at 665,000 during the 2007-2009 recession, when 8.7 million jobs were lost. Economists say the country should brace for jobless claims to continue escalating, partly citing generous provisions of a historic $2.3 trillion fiscal package signed by President Donald Trump last Friday and the federal government’s easing of requirements for workers to seek benefits.

As a result, self-employed and gig workers who previously were unable to claim unemployment benefits are now eligible. In addition, the unemployed will get up to $600 per week for up to four months, which is equivalent to $15 per hour for a 40-hour workweek. By comparison, the government-mandated minimum wage is about $7.25 per hour and the average jobless benefits payment was roughly $385 per person per month at the start of this year.

“Why work when one is better off not working financially and healthwise?” said Sung Won Sohn, a business economics professor at Loyola Marymount University in Los Angeles.

Last week’s claims data has no bearing on the closely watched employment report for March, which is scheduled for release on Friday. For the latter, the government surveyed businesses and households in the middle of the month, when just a handful of states were enforcing “stay-at-home” or “shelter-in-place” orders.

It is, however, a preview of the carnage that awaits. Retailers, including Macy’s, Kohl’s Corp and Gap Inc , said on Monday they would furlough tens of thousands of employees, as they prepare to keep stores shut for longer.

According to a Reuters survey of economists, the government report on Friday is likely to show nonfarm payrolls dropped by 100,000 jobs last month after a robust increase of 273,000 in February. The unemployment rate is forecast to rise three-tenths of a percentage point to 3.8% in March.

“A rough look at the most affected industries suggests a potential payroll job loss of over 16 million jobs,” said David Kelly, chief global strategist at JPMorgan Asset Management in New York. “The loss would be enough to boost the unemployment rate from roughly 3.5% to 12.5%, which would be its highest rate since the Great Depression.”

Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid jumped 1.245 million to 3.029 million for the week ended March 21, the highest since July 6, 2013.

(Reporting By Lucia Mutikani; Editing by Dan Burns, Chizu Nomiyama and Paul Simao)

U.S. coronavirus death toll tops 1,000 as unemployment widens

By Doina Chiacu and Maria Caspani

WASHINGTON/NEW YORK (Reuters) – The U.S. coronavirus death toll topped the 1,000 milestone as the pandemic’s mounting economic burden was illustrated by government data on Thursday showing a record number of Americans seeking unemployment benefits and hospitals struggled to treat a surge of infected patients.

Roughly half the United States was under “stay at home” orders to try to curb the spread of the virus, with the side effects of strangling the economy and unleashing a wave of layoffs. Help may be on the way as the U.S. Congress neared approval of a $2 trillion economic stimulus package.

The number of Americans filing claims for unemployment benefits surged to a record of nearly 3.28 million last week, the Labor Department reported, nearly five times the previous weekly record of 695,000 from the recession of 1982.

And the Labor Department report may understate the problem as the official statistics typically have not included the self-employed or independent contractors. The economy is already in recession, according to some economists.

Louis DeAngelis, 26, worked as a bar tender in Plymouth, New Hampshire, until early last week, when the state’s governor closed all bars and restaurants because of the virus threat. After applying without any problems, he found out he will receive $159 a week, or slightly less than half of his weekly income.

“I’m fortunate to have some family who are willing to help,” said DeAngelis, who also worked as a substitute teacher. “I’ve got options, but a lot of folks don’t.”

A running tally kept by Johns Hopkins University showed that at least 1,046 people had died from COVID-19, the respiratory disease caused by the virus. COVID-19 has been particularly dangerous to the elderly and people with pre-existing medical conditions. New York state leads the nation in both deaths and infections.

Hospitals, laid-off workers and struggling companies will receive badly needed economic aid under the record-setting economic stimulus legislation approved by the Senate late on Wednesday in a 96-0 vote. House of Representatives leaders said they hoped to pass the bill on Friday, and President Donald Trump has said he would sign it into law.

“Every day matters so we want to get this done quickly,” House Republican leader Kevin McCarthy said in an interview with Fox News.

The weekly jobless claims report offered the clearest evidence yet of the pandemic’s impact on the economy, putting an end to nearly 9-1/2 years of job growth.

“The number has sent chills through the markets. If these numbers continue for three or four weeks, there will be demand for more fiscal support,” said Quicky Krosby, chief market strategist for Prudential Financial in Newark, New Jersey.

Federal Reserve Chair Jerome Powell said the United States “may well be in recession.”

Powell said reactivating the economy would have to wait until the virus is under control, despite Trump’s stated desire to resume economic activity by Easter, April 12.

“The first order of business will be to get the spread of the virus under control and then resume economic activity,” Powell told NBC’s Today Show.

“We know that economic activity will decline probably substantially in the second quarter, but I think many expect, and I would expect, economic activity to resume and move back up in the second half of the year,” Powell said.

Powell also said he would defer to experts such as Anthony Fauci, head of U.S. National Institute of Allergy and Infectious Diseases, for guidance on when to lift restrictions.

Fauci told WNYC public radio in New York on Thursday that the changing weather could help combat the virus because generally warm and moist weather provides better conditions than a cold and dry winter.

But he also warned the virus could return for the next northern winter and that experts could not predict this novel coronavirus because it was “unique.”

“We hope we get a respite as we get into April, May and June. It is likely to come around next season because it’s a very vigorous virus,” Fauci said.

“We’re already seeing more infected people in the southern hemisphere now as we head into their winter. So I hope and I think we might get a respite with the weather, which will hopefully give us more time to then prepare for what might be a second round or a seasonal cycling,” Fauci said.

New York Governor Andrew Cuomo has been sounding the alarm about an expected shortage of hospital beds and ventilators. In Italy, the country with the highest number of coronavirus deaths, overwhelmed hospitals have become vehicles of contamination with up to one-fifth of personnel testing positive for the virus at one Milan hospital.

(Reporting by Doina Chiacu and Maria Caspani; Writing by Daniel Trotta; Editing by Steve Orlofsky and Will Dunham)

U.S. weekly jobless claims fall; labor market strong

FILE PHOTO: People wait in line to attend TechFair LA, a technology job fair, in Los Angeles, California, U.S., January 26, 2017. REUTERS/Lucy Nicholson

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits unexpectedly fell last week, suggesting the labor market remains strong even as the economy is slowing.

The jobless claims report from the Labor Department on Thursday, however, does not fully account for the impact of the recent escalation in the bitter trade war between the United States and China, which has led to an inversion of the U.S. Treasury yield curve and raised the risk of a recession.

Worries about the trade war’s impact on the U.S. economic expansion, the longest on record, prompted the Federal Reserve to cut interest rates last week for the first time since 2008. Financial markets have fully priced in another rate cut next month.

Expectations for a 50-basis-point cut at the Fed’s Sept. 17-18 policy meeting have also risen.

“Initial claims have been sending a reasonably upbeat message about conditions in the labor market,” said Daniel Silver, an economist at JPMorgan in New York. “Today’s report likely doesn’t contain much information about the period since the recent escalations in trade tensions.”

Initial claims for state unemployment benefits declined 8,000 to a seasonally adjusted 209,000 for the week ended Aug. 3, the Labor Department said. Economists polled by Reuters had forecast claims would be unchanged at 215,000 in the latest week.

“The message of the unemployment claims data into early August is that layoff activity remained subdued and the labor market is still tight,” said John Ryding, chief economist at RDQ Economics in New York. “Though equity market volatility and low bond yields are driving pessimism about the economic outlook … we would have to see initial claims sustain a rise to the 250,000 level to become concerned about recession.”

U.S. stocks were trading higher as unexpectedly better Chinese data and a steadying of the yuan provided some comfort to investors rattled by the rise in U.S.-China trade tensions. Prices of U.S. Treasuries fell while the dollar <.DXY> was slightly stronger against a basket of currencies.

INVENTORY ACCUMULATION SLOWING Last week’s drop in claims pushed them to the lower end of their 193,000-244,000 range for this year. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, edged up 250 to 212,250 last week.

While hiring has slowed, the pace of job gains remains well above the roughly 100,000 needed per month to keep up with growth in the working-age population.

Nonfarm payrolls increased by 164,000 jobs in July, down from 193,000 in June. Job growth over the last three months averaged 140,000 per month, the lowest in nearly two years, compared to 223,000 in 2018. The moderation in employment growth partly reflects a shortage of workers.

“While net employment growth depends on gross hiring as well as the pace of layoffs, and the trend in payrolls gains may have moderated a bit, major weakening in employment growth is invariably associated with an uptrend in claims,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in White Plains, New York.

The economy grew at a 2.1% annualized rate in the second quarter, slowing from the first quarter’s brisk 3.1% pace. Growth is seen below a 2.0% rate in the July-September quarter.

Slower economic growth was also underscored by a separate report from the Commerce Department on Thursday showing wholesale inventories unchanged in June instead of rising 0.2% as estimated last month.

The component of wholesale inventories that goes into the calculation of gross domestic product edged up 0.1% in June.

While inventories increased further in the second quarter, the pace of accumulation was slower than early in the year. Some of that slowdown reflects a surge in consumer spending in the second quarter.

Businesses are also carefully managing stock levels as the economy’s outlook continues to darken amid the escalation in trade tensions between the United States and China, which has roiled financial markets.

Inventories subtracted 0.86 percentage point from GDP growth in the second quarter.

Sales at wholesalers dropped 0.3% in June after falling 0.6% in May. At June’s sales pace it would take wholesalers 1.36 months to clear shelves, unchanged from May.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Weak U.S. employment report casts pall over economy

FILE PHOTO: Brochures are displayed for job seekers at the Construction Careers Now! hiring event in Denver, Colorado U.S. August 2, 2017. REUTERS/Rick Wilking/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth slowed sharply in May and wages rose less than expected, raising fears that a loss of momentum in economic activity could be spreading to the labor market, which could put pressure on the Federal Reserve to cut interest rates this year.

The broad cool-off in hiring reported by the Labor Department on Friday was even before a recent escalation in trade tensions between the United States and two of its major trading partners, China and Mexico. Analysts have warned the trade fights could undermine the economy, which will celebrate 10 years of expansion next month, the longest on record.

Adding a sting to the closely watched employment report, the economy created far fewer jobs in March and April than previously reported.

The economy thus far has been largely resilient to the trade war with China. President Donald Trump in early May slapped additional tariffs of up to 25% on $200 billion of Chinese goods, which prompted retaliation by Beijing.

Last week, Trump said he would impose a tariff on all goods from Mexico in a bid to force authorities in that country to stop immigrants from Central America from crossing the border into the United States. Talks are ongoing to prevent the duties from kicking in at 5% on June 10.

Fed Chairman Jerome Powell said on Tuesday the central bank was closely monitoring the implications of the trade tensions on the economy and would “act as appropriate to sustain the expansion.”

“Today’s report makes a cut more likely, and supports our view that the trade tensions will ultimately slow growth enough for the Fed to respond in September and December with cuts,” said Joseph Song, an economist at Bank of America Merrill Lynch in New York.

Nonfarm payrolls increased by 75,000 jobs last month, the government said in its closely watched employment report, falling below the roughly 100,000 needed per month to keep up with growth in the working-age population.

Economists polled by Reuters had forecast payrolls rising by 185,000 jobs last month. Job growth in March and April was revised down by 75,000.

In the wake of the weak report financial markets priced in a rate cut as early as July and two more later this year. U.S. Treasury prices rallied, while the dollar dropped against a basket of currencies. Stocks on Wall Street were trading higher.

May’s disappointing job growth was flagged by a report on Wednesday from payrolls processing firm ADP showing the smallest gain in private payrolls in nine years last month. Another report this week showed a drop in online ads by businesses looking for help.

Last month’s slowdown in job gains, however, probably understates the health of the labor market as measures such as weekly applications for unemployment benefits and the Institute for Supply Management’s services employment gauge have suggested underlying strength.

WORKER SHORTAGES

Some of the weakness in hiring last month could be the result of worker shortages, especially in the construction, transportation and manufacturing sectors.

Monthly wage growth remained moderate in May, with average hourly earnings increasing six cents, or 0.2% following a similar gain in April. That lowered the annual increase in wages to 3.1% from 3.2% in April. The average workweek was unchanged at 34.4 hours last month.

The moderation in wage gains, if sustained, could cast doubts on the Fed’s optimism that inflation would return to the U.S. central bank’s 2% target.

The tepid employment report added to soft data on consumer spending, business investment, manufacturing and homes sales in suggesting the economy was losing momentum in the second quarter following a temporary boost from exports, inventory accumulation and defense spending. Growth is cooling as the massive stimulus from last year’s tax cuts and spending increases fades.

The Atlanta Fed is forecasting gross domestic product rising at a 1.5% annualized rate in the second quarter. The economy grew at a 3.1% pace in the first quarter.

The unemployment rate remained near a 50-year low of 3.6% in May. A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped two-tenths of a percentage point to 7.1% last month, the lowest since December 2000.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, was unchanged at 62.8% last month.

Hiring slowed across all sectors in May. Manufacturing payrolls increased by 3,000 last month, after gaining 5,000 positions in April. The sector is struggling with an inventory overhang that has resulted in businesses placing fewer orders at factories.

Manufacturing payrolls will be watched closely for signs of any fallout from the trade tensions. Factory output has weakened and sentiment dropped to a 31-month low in May, with manufacturers worried mostly about trade.

Employers in the construction sector hired 4,000 workers in May after adding 30,000 jobs to payrolls in April. Leisure and hospitality sector payrolls increased by 26,000 jobs last month.

Professional and business services employment rose by 33,000. Transportation and warehousing payrolls fell as did retail employment. Government shed 15,000 jobs, the most since January 2018.

(Reporting by Lucia Mutikani, Editing by Andrea Ricci)

U.S. weekly jobless claims underscore labor market strength

FILE PHOTO: People wait in line to enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York October 7, 2014. REUTERS/Shannon Stapleton/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits unexpectedly fell last week, pointing to sustained labor market strength even as the economy slows.

The economy, which received a temporary boost from volatile exports and inventory accumulation in the first quarter, is losing momentum as last year’s massive stimulus from the Trump administration’s tax cuts and spending increases fades.

Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 211,000 for the week ended May 18, the Labor Department said on Thursday. Data for the prior week was unrevised. Claims have now declined for three straight weeks.

Economists polled by Reuters had forecast claims would rise to 215,000 in the latest week. The Labor Department said no states were estimated last week.

U.S. stock index futures held losses and the dollar dipped against a basket of currencies after the release of the data. Prices of U.S. Treasuries were trading higher. Claims are settling down after some volatility in late April caused by difficulties adjusting the data for seasonal fluctuations around moving holidays like Easter, Passover and school spring breaks.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, dropped 4,750 to 220,250 last week.

Continuing strength in labor market conditions, marked by a the lowest unemployment rate in nearly 50 years, is likely to underpin the economy as it shifts into lower gear.

Retail sales and production at factories fell in April, while the housing market has mostly remained soft.

Gross domestic product estimates for the second quarter are below a 2.0 percent annualized rate. The economy grew at a 3.2 percent pace in the first quarter.

Last week’s claims data covered the survey period for the nonfarm payrolls component of May’s employment report.

The four-week average of claims increased 18,750 between the April and May survey periods, suggesting some moderation in employment gains after payrolls surged by 263,000 jobs last month. The unemployment rate is at 3.6 percent.

Thursday’s claims report showed the number of people receiving benefits after an initial week of aid rose 12,000 to 1.68 million for the week ended May 11.

The four-week moving average of the so-called continuing claims increased 5,500 to 1.67 million.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. job openings surge, point to tightening labor market

FILE PHOTO: Job seekers line up at TechFair in Los Angeles, California, U.S. March 8, 2018. REUTERS/Monica Almeida

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job openings rebounded sharply in March, while the pace of hiring was little changed, pointing to a growing worker shortage that could slow employment growth this year.

Despite the tightening labor market conditions, the report from the Labor Department on Tuesday also showed workers still reluctant to voluntarily quit their jobs in droves to seek opportunities elsewhere. The scarcity of workers poses a risk to the economy’s growth prospects. The economy will mark 10 years of expansion in July, the longest in history.

“The risks right now for the economic outlook going forward is there is actually a danger that companies will run out of the help they need to produce goods or sell their services,” said Chris Rupkey, chief economist at MUFG in New York.

“The U.S. economy has never faced a time when labor shortages might endanger or cut short a long economic expansion, but now it does.”

Job openings, a measure of labor demand, surged by 346,000 to a seasonally adjusted 7.5 million, the Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS, showed. The job openings rate rose to 4.7 percent from 4.5 percent in February.

Vacancies in the construction industry increased by 73,000 in March. There were 87,000 job openings in the transportation, warehousing and utilities sector, while real estate, rental and leasing companies had 57,000 unfilled position. Job openings in the federal government, however, decreased by 15,000 in March.

HIRING LAGGING

Hiring was little changed at 5.7 million in March. The hiring rate was steady at 3.8 percent. The lag in hiring suggests employers are experiencing difficulties finding qualified workers, a trend that implies a slowdown in job growth later this year.

There is growing anecdotal evidence of worker shortages, especially in the transportation, manufacturing and construction industries. The economy created 263,000 jobs in April, with the unemployment rate dropping two-tenths of a percentage point to 3.6 percent, the government reported last Friday.

Economists expect job growth to slow to about 150,000 per month this year, still well above the roughly 100,000 needed to keep pace with growth in the working age population.

In March, there were 0.83 job seekers for every job opening. Job openings exceeded the number of unemployed by 1.3 million. Vacancies have outpaced the unemployed for 13 straight months.

The number of workers voluntarily quitting their jobs was little changed at 3.4 million in March, keeping the quits rate at 2.3 percent for a 10th straight month.

The quits rate is viewed by policymakers and economists as a measure of job market confidence. The Federal Reserve last week kept interest rates unchanged and signaled little desire to adjust monetary policy anytime soon.

“You have to hand it to the business community. Despite being on the wrong side of the tight labor market, firms are managing to keep from a major bidding war for workers and are still not losing workers to competitors,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

Layoffs slipped in March, lowering the layoffs rate to 1.1 percent from 1.2 percent in the prior month. Layoffs fell in the government sector, but rose slightly in manufacturing and construction. The increase in manufacturing layoffs likely reflected redundancies in the automobile sector, which is experiencing slowing sales and an inventory overhang.

“Layoffs and discharges are extremely low, by historical standards, which reflects that employers need their workers and are prepared to make an effort to retain them,” said Julia Pollak, labor economist at employment marketplace ZipRecruiter.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

U.S. job growth surges; unemployment rate drops to 3.6 percent

FILE PHOTO: Job seekers and recruiters gather at TechFair in Los Angeles, California, U.S. March 8, 2018. REUTERS/Monica Almeida -/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth surged in April and the unemployment rate dropped to a more than 49-year low of 3.6 percent, pointing to sustained strength in economic activity even as last year’s massive fiscal stimulus fades.

The Labor Department’s closely watched monthly employment report on Friday, however, showed steady wage gains last month, consistent with moderate inflation. The decline in the unemployment rate to the lowest level since December 1969 was because people left the labor force, suggesting some slack in the jobs market remains.

The report was broadly supportive of the Federal Reserve’s decision on Wednesday to keep interest rates unchanged and signal little desire to adjust monetary policy anytime soon. Fed Chair Jerome Powell described the economy and job growth as “a bit stronger than we anticipated” and inflation “somewhat weaker.”

“Employment gains are strong enough to dispel any immediate concerns over the health of the economy, while wage gains are not strong enough to force the Federal Reserve&rsquo;s hand to tighten the policy stance,” said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

Nonfarm payrolls increased by 263,000 jobs last month, amid gains in hiring nearly across all sectors. The economy created 16,000 more jobs in February and March than previously reported. Economists polled by Reuters had forecast nonfarm payrolls rising by 185,000 jobs last month.

The strong economy, especially the labor market, could boost President Donald Trump’s re-election hopes next year. Trump has touted the economy as being one of the big wins of his first term in office. The economy will celebrate 10 years of expansion in July, the longest on record.

Job growth is well above the roughly 100,000 needed per month to keep up with growth in the working-age population.

The second month of strong job growth was further evidence that February’s paltry 56,000 increase in jobs was an aberration.

It also effectively put to rest concerns about a recession and diminished expectations of an interest rate cut this year that had been fanned by a brief inversion of the U.S. Treasury yield curve in March.

Hiring remains strong, despite anecdotal evidence of worker shortages in the transportation, manufacturing and construction industries, suggesting there is still some spare capacity in the labor market.

Steadily rising wages have on balance been keeping workers in the labor force and drawing back those who had dropped out. Average hourly earnings rose six cents, or 0.2 percent in April after rising by the same margin in March. That kept the annual increase in wages at 3.2 percent. Workers put in fewer hours in April. The average workweek fell to 34.4 hours from 34.5 hours.

Though wage growth is not strong enough to drive up inflation, it is seen as sufficient to underpin economic growth as the stimulus from last year’s $1.5 trillion tax cut wanes.

The economy grew at a 3.2 percent annualized rate in the first quarter, driven by a surge in exports and inventories, quickening from the October-December period’s 2.2 percent pace.

The dollar dipped versus a basket of currencies after the employment report, while U.S. Treasury yields were marginally lower.

PEOPLE LEFT LABOR FORCE

The two-tenths of a percentage point drop in the unemployment rate from 3.8 percent in March was because 490,000 people left the labor force in April. The jobless rate is now below the 3.7 percent that Fed officials project it will be by the end of the year.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, was unchanged at 7.3 percent in April.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell to 62.8 percent in April from 63.0 percent in March. The participation rate hit a more than five-year high of 63.2 percent in January.

Some economists expect job growth to slow this year as fewer workers become available, which will push up wages and lift inflation back to the Fed’s 2 percent target. An inflation measure tracked by the U.S. central bank increased 1.6 percent in the year to March, the smallest gain in 14 months, from 1.7 percent in February.

Employment at construction sites increased by 33,000 jobs in April, rising for a second straight month. Manufacturing sector payrolls rebounded by 4,000 jobs after being unchanged in March.

The industry is being pressured by layoffs in the automobile sector as assembly plants try to cope with declining sales and an inventory overhang.

Leisure and hospitality sector payrolls increased by 34,000 jobs last month. Professional and business services employment added 76,000 jobs last month. There were increases in healthcare, transportation and warehousing employment, as well as financial activities.

But retail payrolls fell by 12,000 jobs in April, declining for a third straight month. Temporary help, a harbinger for future hiring, rebounded last month after dropping in March.

Government payrolls increased by 27,000 in April, likely driven by early hiring for the 2020 Census.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. weekly unemployment claims lowest since 1969

FILE PHOTO: A "Help Wanted" sign sits in the window of a shop in Harvard Square in Cambridge, Massachusetts, U.S., February 11, 2019. REUTERS/Brian Snyder/File Photo

WASHINGTON, (Reuters) – The number of Americans filing applications for unemployment benefits dropped to a 49-1/2-year low last week, pointing to sustained labor market strength that could temper expectations of a sharp slowdown in economic growth.

Initial claims for state unemployment benefits fell 8,000 to a seasonally adjusted 196,000 for the week ended April 6, the lowest level since early October 1969. Claims have now declined for four straight weeks. Data for the prior week was revised to show 2,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims would rise to 211,000 in the latest week. The Labor Department said no states were estimated last 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 7,000 to 207,000 last week, the lowest level since early December 1969.

The labor market is the main pillar of support for the economy, which appears to have lost momentum in the first quarter as the stimulus from a $1.5 trillion tax cut package fades and a trade war between China and the United States and softening global demand hurt exports.

Nonfarm payrolls increased by 196,000 jobs in March, well above the roughly 100,000 needed per month to keep up with growth in the working-age population. The unemployment rate is at 3.8 percent, close to the 3.7 percent Federal Reserve officials project it will be by the end of the year.

Thursday’s claims report showed the number of people receiving benefits after an initial week of aid decreased 13,000 to 1.71 million for the week ended March 30. The four-week moving average of the so-called continuing claims dropped 11,000 to 1.73 million.

(Reporting by Lucia Mutikani Editing by Paul Simao) ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: lucia.mutikani.thomsonreuters.com@reuters.net)

Americans filing applications for unemployment benefits fall to lowest level since 1969

FILE PHOTO - People attend the Executive Branch Job Fair hosted by the Conservative Partnership Institute at the Dirksen Senate Office Building in Washington, U.S., June 15, 2018. REUTERS/Toya Sarno Jordan/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits fell to a more than 49-year low last week, pointing to sustained labor market strength despite slowing economic growth.

Other data on Thursday showed U.S.-based companies announced fewer layoffs in March, but job cuts for the first quarter were the highest since 2015. The economy is losing momentum as the stimulus from a $1.5 trillion tax cut package fades

Initial claims for state unemployment benefits declined 10,000 to a seasonally adjusted 202,000 for the week ended March 30, the lowest level since early December 1969, the Labor Department said. Data for the prior week was revised to show 1,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims rising to 216,000 in the latest week. The Labor Department said only claims for California were estimated.

The claims data has shown no significant pickup in layoffs and there have been reports of companies reluctant to let go of workers amid a growing shortage of skilled labor. The scarcity of workers contributed to a recent slowdown in hiring.

Job growth has slowed from last year’s roughly 225,000 monthly average pace. The pace of increase, however, remains more than sufficient to keep up with growth in the working age population, holding down the unemployment rate.

U.S. Treasuries prices pared gains after the data, while the dollar was little changed against a basket of currencies.

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 4,000 to 213,500 last week, the lowest level since early October 2018.

The claims data has no bearing on March’s employment report, which is scheduled for release on Friday. According to a Reuters survey of economists, nonfarm payrolls likely increased by 180,000 jobs last month after a meager 20,000 in February, which was seen as pay-back after robust gains in the prior two months.

The unemployment rate is forecast unchanged at 3.8 percent.

A separate report on Thursday from global outplacement consultancy Challenger, Gray &amp; Christmas showed planned job cuts by U.S.-based employers dropped 21 percent to 60,587 in March.

However, layoffs in the first quarter jumped 10.3 percent to 190,410 from the last three months of 2018. That was the highest since the third quarter of 2015 and was partly blamed on “economic uncertainty and fears of an upcoming downturn.”

Retailers continued to lead job cuts, purging 46,061 positions in the first quarter. The automotive sector eliminated 8,838 jobs in March, leading to 15,887 layoffs by auto manufacturers and suppliers in the first quarter. Redundancies were also high in the energy and financial sectors.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)