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USA Today
15 hours ago
- Business
- USA Today
US jobless claims surge as tariffs cloud economic outlook
US jobless claims surge as tariffs cloud economic outlook Show Caption Hide Caption FDA will reduce food and drug inspections due to federal layoffs FDA scales back routine inspections due to support staff layoffs, prioritizing high-risk cases amid government restructuring and budget cuts. Straight Arrow News The number of Americans filing new applications for jobless benefits increased more than expected last week and the unemployment rate appeared to have picked up in May, suggesting layoffs were rising as tariffs cloud the economic outlook. The report from the Labor Department on Thursday showed a surge in applications in Michigan last week, the nation's motor vehicle assembly hub. The number of people collecting unemployment checks in mid-May was the largest in 3-1/2 years. The dimming economic outlook was reinforced by other data showing corporate profits declining by the most in more than four years in the first quarter, pulled down by non-financial domestic industries. A U.S. trade court on Wednesday blocked most of President Donald Trump's tariffs from going into effect in a sweeping ruling that the president overstepped his authority. They were temporarily reinstated by a federal appeals court on Thursday, adding another layer of uncertainty over the economy. "This is a sign that cracks are starting to form in the economy and that the outlook is deteriorating," said Christopher Rupkey, chief economist at FWDBONDS. "There is nothing great about today's jobless claims data and the jump in layoffs may be a harbinger of worse things to come." You won't know when a recession starts: 5 key facts about downturns Initial claims for state unemployment benefits rose 14,000 to a seasonally adjusted 240,000 for the week ended May 24, the Labor Department said. Economists polled by Reuters had forecast 230,000 claims for the latest week. They said Trump's aggressive trade policy was making it harder for businesses to plan ahead, a sentiment echoed by a Conference Board survey on Thursday, which showed confidence among chief executive officers plummeting in the second quarter. Unadjusted claims for Michigan jumped 3,329. The automobile industry has been hit with a 25% duty on parts. There were also notable increases in benefits applications in Nebraska and California. Despite the rise in claims, worker hoarding by employers following difficulties finding labor during and after the COVID-19 pandemic continues to underpin the jobs market. That was corroborated by the Conference Board survey, which also showed most captains of business anticipated no change in the size of their workforce over the next year even as about 83% said they expected a recession in the next 12-18 months. Nonetheless, layoffs are creeping up. A report from the Bank of America Institute noted a sharp rise in higher-income households receiving unemployment benefits between February and April compared to the same period last year. Its analysis of Bank of America deposit accounts also showed notable rises among lower-income as well as middle-income households in April from the same period a year ago. Claims could remain elevated in the coming weeks, in part reflecting difficulties adjusting the data for seasonal fluctuations, following a similar pattern in recent years. Minutes of the Federal Reserve's May 6-7 policy meeting published on Wednesday showed while policymakers continued to view labor market conditions as broadly in balance, they "assessed that there was a risk that the labor market would weaken in coming months." The U.S. central bank has kept its benchmark overnight interest rate in the 4.25%-4.50% range since December as officials struggle to estimate the impact of Trump's tariffs, which have raised the prospect of higher inflation and slower economic growth this year. Stocks on Wall Street were trading higher. The dollar slipped against a basket of currencies after a brief rally. U.S. Treasury yields fell. Swelling unemployment rolls The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 26,000 to a seasonally adjusted 1.919 million during the week ending May 17, the highest since November 2021, the claims report showed. The elevated so-called continuing claims reflect companies' hesitance to increase headcount. Continuing claims covered the period during which the government surveyed households for May's unemployment rate. They increased between the April and May survey periods, suggesting an uptick in the unemployment rate this month. "This raises the risk that the unemployment rate could tick up to 4.3% in the May employment report," said Abiel Reinhart, an economist at JP Morgan. The jobless rate was at 4.2% in April. Many people who have lost their jobs are experiencing long spells of unemployment. With profits slowing, there is probably little incentive for businesses to boost hiring. Profits from current production with inventory valuation and capital consumption adjustments dropped $118.1 billion in the first quarter, the biggest decline since the fourth quarter of 2020, the Commerce Department's Bureau of Economic Analysis (BEA) said in a separate report. Profits surged $204.7 billion in the October-December quarter. Profits from domestic non-financial firms dropped $96.7 billion. Companies ranging from airlines and retailers to motor vehicle manufacturers have either withdrawn or refrained from giving financial guidance for 2025, citing tariffs uncertainty. Businesses front-loaded imports, resulting in a record trade deficit that contributed to gross domestic product declining at a 0.2% annualized rate in the January-March quarter, the BEA's second estimate of GDP showed. Some of the imports ended up as inventory in warehouses, with growth in consumer spending downgraded to a 1.2% rate from the initially reported 1.8% pace. The economy was initially estimated to have contracted at a 0.3% pace. It grew at a 2.4% rate in the fourth quarter. A measure of domestic demand was also revised lower. Other alternative measures of growth, gross domestic income and gross domestic output also showed the economy contracting at a 0.2% pace in the first quarter. There were small downward revisions to inflation. "GDP will likely either contract again in the second quarter or hold in low gear, but the economy is unlikely to slip into recession," said Bill Adams, chief economist at Comerica Bank. Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
Yahoo
06-05-2025
- Business
- Yahoo
US import prices muted, but tariffs loom over inflation
WASHINGTON − U.S. import prices unexpectedly fell in March, pulled down by decreasing costs for energy products, the latest indication that inflation was subsiding before President Donald Trump's sweeping tariffs came into effect. The report from the Labor Department on Tuesday added to March's benign consumer and producer prices data. Economists expect tame readings in March in the key inflation measures tracked by the Federal Reserve for its 2% target. "There is likely to be a very painful and costly transition for the U.S. economy as Trump 2.0 tries to turn back the clock and go back to making things in America," said Christopher Rupkey, chief economist at FWDBONDS. "Import prices are not adding much to inflation for now, but the future outlook remains very much in doubt and not in a good way." Import prices dipped 0.1% last month, the first decline since September, after a downwardly revised 0.2% gain in February, the Labor Department's Bureau of Labor Statistics said. Economists polled by Reuters had forecast import prices, which exclude tariffs and are measured close to the beginning of the month, would be unchanged following a previously reported 0.4% increase in February. In the 12 months through March, import prices advanced 0.9% after increasing 1.6% the prior month. The import price data cemented economists' expectations that the Personal Consumption Expenditures (PCE) price index excluding food and energy edged up 0.1% in March after shooting up 0.4% in February. That would slow the annual increase in so-called core PCE inflation to 2.6% from 2.8% in February. February was the third biggest for imports to the U.S., according to Census trade data. Shipping containers are organized at the Houston Port Authority on February 10, 2025 in Houston, Texas. More: Economy will likely slow to near-standstill or recession despite Trump tariff pause, experts say The White House's import duties campaign has triggered a damaging trade war with China and plunged financial markets into turmoil. Investors are fearful of high inflation and tepid growth or even a recession. Minutes of the Federal Reserve's March 18-19 meeting published last week showed policymakers were nearly unanimous that the economy faced risks of simultaneously higher inflation and slower growth, commonly referred to as stagflation. Inflation and growth fears were amplified by a separate survey from the New York Fed on Tuesday showing businesses in New York state in April expected conditions to deteriorate over the next six months. A measure of future general business conditions slumped to its second-lowest reading in the survey's more than 20-year history. Businesses also noted worsening supply availability. The survey's measures of prices paid for inputs and received for goods sold jumped to more than two-year highs.
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Business Standard
02-05-2025
- Business
- Business Standard
US adds 177,000 jobs in sign of resilience; unemployment steady at 4.2%
American employers added a better-than-expected 1,77,000 jobs in April as the job market showed resilience in the face of President Donald Trump's trade wars. Hiring was down slightly from a revised 1,85,000 in March and came in above economists' expectations for a modest 1,35,000. The unemployment rate remained at a low 4.2 per cent, the Labour Department reported Friday. President Donald Trump's aggressive and unpredictable policies including massive import taxes have clouded the outlook for the economy and the job market and raised fears that the American economy is headed toward recession. But Friday's report showed the damage isn't showing up in the labour market yet. The labour market refuses to buckle in the face of trade war uncertainty, Christopher Rupkey, chief economist at fwdbonds, a financial markets research firm. Politicians can count their lucky stars that companies are holding on to their workers despite the storm clouds forming that could slow the economy further in the second half of the year. Transportation and warehousing companies added 29,000 jobs last month, suggesting that companies have been stocking up before essential, imported goods are hit with a wave of new tariffs, driving prices higher. Healthcare companies added nearly 51,000 jobs and bars, restaurants almost 17,000 and construction firms 11,000. Factories lost 1,000 jobs. Labour Department revisions shaved 58,000 jobs from February and March payrolls. Average hourly earnings ticked up 0.2 per cent from March and 3.8 per cent from a year ago, nearing the 3.5 per cent that economists view as consistent with the 2 per cent inflation the Federal Reserve wants to see. The report showed that 5,18,000 people entered the labour force, and the percentage of those working or looking for work ticked up slightly. We are not seeing right now any really adverse effects on the employment market, Boston College economist Brian Bethune said before the report came out. Yet many economists fear that the US job market will deteriorate if economic growth takes a hit from trade wars. Trump's massive taxes on imports to the US are likely to raise costs for Americans and American businesses that depend on supplies from overseas. They also threaten to slow economic growth. His immigration crackdown threatens to make it more difficult for hotels, restaurants and construction firms to fill job openings. By purging federal workers and cancelling federal contracts, Elon Musk's Department of Government Efficiency risks wiping out jobs inside the government and out. Looking ahead, we expect the steep tariff increases and the surge in uncertainty and financial market volatility will result in a more pronounced labour market downshift than previously anticipated, Lydia Boussour, senior economist at the accounting and consulting giant EY, wrote this week. Large cuts to the federal workforce and the cancellations of many government contracts will also be a drag on payroll growth in coming months. A slowdown in immigration will weigh on labour supply dynamics, further constraining job growth. We foresee the unemployment rate rising toward 5 per cent in 2025. Trump's policies have shaken financial markets and frightened consumers. The Conference Board, a business group, reported Tuesday that Americans' confidence in the economy fell for the fifth straight month to the lowest level since the onset of the COVID-19 pandemic. American workers have at least one thing going for them. Despite the uncertainty about fallout from Trump's policies, many employers don't want to risk letting employees go not after seeing how hard it was to bring people back from the massive but short-lived layoffs of the 2020 COVID-19 recession. They laid millions of these people off, and they had a hell of a time getting them back to work, Boston College's Bethune said. So for now, the unemployment rate and the number of people filing claims for jobless benefits every week remain low by historical standards. The federal government's workforce fell by 9,000 on top of 17,000 job losses in February and March, Still, the full effect of Musk's DOGE cuts may not be showing up yet. For one thing, Bethune noted, job cuts orders by the billionaire's DOGE are still being challenged in court. For another, some of those leaving federal agencies were forced into early retirement and don't show up in the Labour Department's count of the unemployed. Solid hiring and low unemployment will likely keep the Federal Reserve on the sidelines as it takes time to evaluate the impact of tariffs on the economy. Fed chair Jerome Powell has underscored that the duties are likely to push up prices in the coming months, making the central bank wary of the potential for higher inflation. The Fed typically fights inflation with higher interest rates, so it is unlikely to cut its key short-term rate anytime soon. It might change course and reduce rates if layoffs spiked and unemployment rose, but Friday's report suggests that isn't happening yet.
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First Post
02-05-2025
- Business
- First Post
‘Market refuses to buckle:' US adds 177,000 jobs in April, beating expectations
While US President Donald Trump's tariff policies have ushered in an era of unpredictability, analysts believe the damage is not showing up in the labour market yet read more The US economy added 177,000 jobs in April, much more than what analysts anticipated. However, this was lower than the March figure of 185,000. The US Labor Department reported Friday (May 2) that the unemployment rate remained at a low 4.2 per cent. While US President Donald Trump's tariff policies have ushered in an era of unpredictability, analysts believe the damage is not showing up in the labour market yet. 'The labour market refuses to buckle in the face of trade war uncertainty,' Christopher Rupkey, chief economist at fwdbonds, a financial markets research firm, was quoted as saying by CNBC. STORY CONTINUES BELOW THIS AD 'Politicians can count their lucky stars that companies are holding on to their workers despite the storm clouds forming that could slow the economy further in the second half of the year,' he added. More insights Transportation and warehousing companies added 29,000 jobs last month, possibly because firms are rushing to stock up on imports before new tariffs drive prices higher. Healthcare added nearly 51,000 jobs, while bars and restaurants added 17,000, and construction gained 11,000. However, factories lost 1,000 jobs. Wages rise at moderate pace Wages continued to rise at a moderate pace. Average hourly earnings went up by 0.2 per cent from March and are now 3.8 per cent higher than a year ago. That's close to the 3.5 per cent annual wage growth economists say is in line with the Federal Reserve's 2 per cent inflation goal. The labor force grew by 5,18,000 people last month, and the participation rate—the percentage of people working or looking for work—edged up slightly. Boston College economist Brian Bethune said before the report that there were no clear signs of weakness in the job market. 'We are not seeing right now any really adverse effects on the employment market.' Still, many economists worry that a slowdown in economic growth caused by trade tensions could hurt hiring. So far, however, companies seem hesitant to cut workers. Many still remember how difficult it was to rehire after the sharp but brief layoffs during the 2020 COVID-19 recession. The overall strength in hiring and the low unemployment rate suggest the Federal Reserve will hold off on any rate cuts for now. Chairman Jerome Powell has said tariffs could raise prices, making the Fed cautious about inflation. Unless layoffs rise sharply, a rate cut appears unlikely at this time. STORY CONTINUES BELOW THIS AD
Free Malaysia Today
01-05-2025
- Business
- Free Malaysia Today
US weekly jobless claims jump to two-month high
Jobless benefit recipients increased by 83,000 to 1.916 million, the highest since November 2021, indicating slower hiring. (EPA Images pic) WASHINGTON : The number of Americans filing new applications for jobless benefits surged to a two-month high last week, but that likely did not mark a material shift in labour market conditions as the rise was related to school spring breaks in New York state. Nonetheless, the labour market is softening, with the report from the Labor Department on Thursday also showing unemployment rolls swelled to levels last seen nearly 3-1/2 years ago. Businesses in general have mostly adopted a wait-and-see attitude to President Donald Trump's aggressive trade policy, and are retaining their workforces, while remaining cautious about adding headcount. 'While part of it appears to be related to the difficulty of seasonally adjusting the data during school spring breaks and the Easter and Passover holidays, especially in New York state, it is troubling that the nation's unemployment rolls have shot up, reflecting the difficulties the jobless have in finding new work,' said Christopher Rupkey, chief economist at FWDBONDS. Initial claims for state unemployment benefits jumped 18,000 to a seasonally adjusted 241,000 for the week ended April 26, the highest level since February. Economists polled by Reuters had forecast 224,000 claims for the latest week. Unadjusted claims rose 12,901 to 223,614 last week. They were lifted by a surge of 15,525 in filings in New York state. Claims in Massachusetts shot up 3,251, helping to more than offset notable declines in Connecticut and Missouri. The economy contracted last quarter for the first time in three years, swamped by a flood of imports as businesses tried to avoid duties from the Trump administration's tariffs. Economists expect the tariffs to result in a wave of job losses. Expected to be a drag on domestic demand, the tariffs already are prompting some companies to reduce staff. United Parcel Service said on Tuesday it would slash 20,000 jobs and shut 73 facilities as part of a planned reduction in deliveries for 'While the labour market is far from recessionary territory, it could turn if other companies follow UPS' suit and start trimming payrolls,' said Andrew Stettner, director of economy and jobs at the Century Foundation. US stocks opened higher. The dollar rose against a basket of currencies. US Treasuries were mixed. The number of people receiving benefits after an initial week of aid, a proxy for hiring, soared 83,000 to a seasonally adjusted 1.916 million during the week ending April 19, the highest level since November 2021, the claims report showed. The claims data have no bearing on April's employment report, scheduled for release on Friday. Nonfarm payrolls likely increased by 130,000 jobs last month after rising by 228,000 in March, a Reuters survey of economists showed. The unemployment rate is forecast to be unchanged at 4.2%. 'We expect firms have already started slowing their hiring, and we expect to see news of that in tomorrow's payroll employment report,' said Carl Weinberg, chief economist at High Frequency Economics.
