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Gulf Today
2 days ago
- Business
- Gulf Today
Weekly jobless claims hit 7-month high; imports post record decline
The number of Americans filing new applications for unemployment benefits increased to a seven-month high last week, pointing to softening labour market conditions amid mounting economic headwinds from tariffs. The report from the labour Department also continued to show workers losing their jobs having a tough time landing new opportunities as uncertainty caused by President Donald Trump's aggressive trade policy leaves employers reluctant to increase headcount. The data included the Memorial Day holiday, which economists said could have caused difficulties with the seasonal adjustment and likely contributed to the second straight weekly increase in unemployment claims. Still, they said the report offered some evidence of labour market strains. 'We won't dismiss the rise in claims over the last two weeks, which may be signaling weakening labour market conditions in response to the Trump administration's tariff policies and uncertainty,' said Nancy Vanden Houten, lead US economist at Oxford Economics. 'However, seasonal quirks might have contributed to the rise in claims.' Initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 247,000 for the week ended May 31, the highest level since last October. Economists polled by Reuters had forecast 235,000 claims for the latest week. With the start of the school holidays this month, claims could remain elevated as some states allow non-teaching staff to collect benefits. There were notable rises in unadjusted claims in Kentucky and Tennessee, likely related to layoffs in the motor vehicle industry amid duties on imported parts. Claims surged in the prior week in Michigan, attributed to layoffs in the manufacturing industry. But companies are generally hoarding workers after struggling to find labour during and after the COVID-19 pandemic. The Federal Reserve's Beige Book report on Wednesday showed 'comments about uncertainty delaying hiring were widespread,' noting that 'all districts described lower labour demand, citing declining hours worked and overtime, hiring pauses and staff reduction plans.' It said while some districts reported layoffs in certain sectors, 'these layoffs were not pervasive.' Stocks on Wall Street were higher. The dollar was steady against a basket of currencies. US Treasury yields rose. The number of people receiving benefits after an initial week of aid, a proxy for hiring, slipped 3,000 to a seasonally adjusted 1.904 million during the week ending May 24, the claims report showed. The elevation in the so-called continuing claims aligns with consumers' ebbing confidence in the labour market. SLACKENING labour MARKET The claims data have no bearing on the labour Department's closely watched employment report for May, scheduled to be released on Friday, as it falls outside the survey period. Nonfarm payrolls likely increased by 130,000 jobs last month after advancing by 177,000 in April, a Reuters survey of economists showed. The unemployment rate is forecast being unchanged at 4.2%. 'A gradual but genuine slackening of the labour market is underway,' said Oliver Allen, senior US economist at Pantheon Macroeconomics. There was, however, some welcome news on the economy. A separate report from the Commerce Department's Bureau of Economic Analysis showed the trade deficit narrowed sharply in April, with imports decreasing by the most on record as the front-running of goods ahead of tariffs ebbed, which could provide a lift to economic growth this quarter. The trade gap contracted by a record 55.5% to $61.6 billion, the lowest level since September 2023. The goods trade deficit eased by a record 46.2% to $87.4 billion, the lowest level since October 2023. A rush to beat import duties helped to widen the trade deficit in the first quarter, which accounted for a large part of the 0.2% annualized rate of decline in gross domestic product last quarter. The contraction in the deficit, at face value, suggests that trade could significantly add to GDP this quarter, but much would depend on the state of inventories. 'The collapse in the trade gap, although unlikely to be sustained, points to a massive trade addition to GDP growth and, if the offset to the import swing is not measured in inventories, second-quarter measured GDP growth could be eye-popping, possibly in the area of 5%, but as meaningless as the first-quarter's decline in output,' said Conrad DeQuadros, senior economic advisor at Brean Capital. Imports decreased by a record 16.3% to $351.0 billion in April. Goods imports slumped by a record 19.9% to $277.9 billion, held down by a $33.0 billion decline in consumer goods, mostly pharmaceutical preparations from Ireland. Agencies
Gulf Today
3 days ago
- Business
- Gulf Today
US job growth slows in May; unemployment rate steady
US job growth slowed in May amid headwinds from tariff uncertainty, while the unemployment rate held steady at 4.2 per cent, potentially giving the Federal Reserve cover to delay resuming interest rate cuts for a while. Nonfarm payrolls increased by 139,000 jobs last month after rising by a downwardly revised 147,000 in April, the labour Department's Bureau of labour Statistics said in its closely watched employment report on Friday. Economists polled by Reuters had forecast 130,000 jobs added after a previously reported 177,000 rise in April. Estimates ranged from 75,000 to 190,000 jobs. The unemployment rate remained at 4.2 per cent for the third straight month. The economy needs to create roughly 100,000 jobs per month to keep up with growth in the working age population. That number could decline as President Donald Trump has revoked the temporary legal status of hundreds of thousands of migrants amid an immigration crackdown. Much of the job growth this year reflects worker hoarding by businesses amid Trump's flip-flopping on tariffs, which economists say has hampered companies' ability to plan ahead. Opposition to Trump's tax-cut and spending bill from hardline conservative Republicans in the US Senate and billionaire Elon Musk adds another layer of uncertainty for businesses. Employers' reluctance to lay off workers potentially keeps the US central bank on the sidelines until the end of the year. Financial markets expect the Fed will leave its benchmark overnight interest rate unchanged in the 4.25 per cent-4.50 per cent range this month, before resuming policy easing in September. US Treasury yields rose after data on Friday showed that employers added more jobs than economists had expected in May, while average hourly earnings also rose more than was forecast. Employers added 139,000 jobs last month, above estimates for a 130,000 increase. Average hourly earnings increased 0.4 per cent in May, above expectations for a 0.3 per cent increase. The unemployment rate held steady at 4.2 per cent, as expected. The yield on benchmark US 10-year notes was last up 5.1 basis points on the day at 4.446 per cent. Interest rate sensitive two-year note yields rose 3.8 basis points to 3.962 per cent. US stock index futures extended gains on Friday after a stronger-than-expected jobs report calmed worries over the health of the labour market in the wake of President Donald Trump's tariff war. A labour Department report showed nonfarm payrolls increased 139,000 in May, compared with estimates for a rise of 130,000, according to economists polled by Reuters. The unemployment rate stood at 4.2 per cent, in-line with a forecast of 4.2 per cent. At 08:30 a.m. ET, Dow E-minis were up 232 points, or 0.57 per cent, S&P 500 E-minis were up 36.25 points, or 0.63 per cent, and Nasdaq 100 E-minis were up 142.75 points, or 0.66 per cent Meanwhile the dollar was headed for a weekly loss on Friday, undermined by signs of fragility in the US economy and little progress on trade negotiations between Washington and its partners, ahead of a critical jobs report. The US nonfarm payrolls report expected later on will draw greater scrutiny after a slew of weaker-than-expected economic data this week underscored that President Donald Trump's tariffs were taking a toll on the economy. Analysts say the data so far has indicated that the US economy faces a period of increasing price pressures and slowing growth, which could complicate Federal Reserve monetary policy, even as Trump has been critical of the institution's cautious stance. Against a basket of currencies, the dollar edged up to 98.9, and was headed for a weekly loss of 0.5 per cent. The euro was taking a breather after hitting a 1-1/2-month top on Thursday following hawkish remarks from the European Central Bank. It last bought roughly $1.1423, down just 0.18 per cent on the day. Traders have pushed back expectations on the timing of the next rate cut, but continue to anticipate a 25-basis point reduction by year-end. Deutsche Bank's Mark Wall said he still expects 50 basis points worth of ECB rate cuts, adding 'it is still too early to judge the impact of the trade war, and the path of the trade war is in any case still inherently unpredictable.' Reflecting a struggling economy, data showed that German exports and industrial output fell more than expected in April. Most currencies had surged against the dollar late on Thursday, helped by news that Trump and Chinese President Xi Jinping spoke on a call for more than an hour, before paring some of their gains. Investors remain worried about US trade negotiations and the lack of progress in hashing out deals ahead of an early July deadline. The highly anticipated call between Trump and Xi also provided little clarity and the spotlight on it was quickly stolen by a public fallout between Trump and Elon Musk. Elsewhere, cryptocurrency dogecoin, often supported by Musk, was a touch firmer after falling to a one-month low on Thursday. US equity funds saw outflows for a third straight week through June 4, as concerns lingered over uncertainty surrounding US trade policies, while investors remained cautious ahead of a key jobs report due Friday. Reuters
Gulf Today
09-03-2025
- Business
- Gulf Today
US employers add a solid 151,000 jobs last month; jobless rate up
US employers added solid 151,000 jobs last month, but the outlook is cloudy as President Donald threatens a trade war, purges the federal workforce and promises to deport millions of immigrants. The labour Department reported on Friday that hiring was up from a revised 125,000 in January. Economists had expected 160,000 new jobs last month. The unemployment rate rose slightly to 4.1% as the number jobless Americans rose by 203,000. Employment rose in healthcare, finance and transportation and warehousing. The federal government shed 10,000 jobs, the most since June 2022, though economists don't expect Trump's federal layoffs to have much of an impact until the March jobs report. Restaurants and bars cut nearly 28,000 jobs last month on top of a loss of almost 30,000 in January. 'The labour market continues to hold up, but we're still a far cry from where we were a year or two years ago,'' said Sarah House, senior economist at Wells Fargo. House expects hiring to slow and unemployment to creep higher as Trump continues to cut spending on programs and slash the federal workforce, while imposing tariffs on America's trading partners. The spending cuts 'are likely to spill over into the private sector, hitting contractors and nonprofits, and we still have a trade war that is picking up,'' House said. 'There are multiple battles for the labour market to fight off, multiple shocks it's having to work through in the months ahead.'' The economy's unexpectedly strong recovery from the pandemic recession of 2020 set loose an inflationary surge that peaked in June 2022 when prices came in 9.1% higher than they'd been a year earlier. In response, the Federal Reserve raised its benchmark interest rate 11 times in 2022 and 2023, taking it to the highest level in more than two decades. The economy remained sturdy despite the higher borrowing costs, defying expectations of a recession, thanks to strong consumer spending, big productivity gains at businesses and an influx of immigrants who eased labour shortages. The American job market has remained remarkably resilient, but it has cooled from the red-hot hiring of 2021-2023. Employers added a decent average of 168,000 jobs a month last year. But that was down from 216,000 in 2023, 380,000 in 2022 and a record 603,000 in 2021 as the economy rebounded from COVID-19 lockdowns. Inflation came down - dropping to 2.4% in September − allowing the Fed to reverse course and cut rates three times in 2024. The rate-cutting was expected to continue this year, but progress on inflation has stalled since summer, and the Fed has held off. Average hourly earnings rose 0.3% last month, down from a 0.4% increase in January. Fed officials will likely see the figures as supporting their current wait-and-see approach toward interest-rate cuts. With inflation still modestly above the Fed's 2% target, several have made clear in recent remarks that they would like to see more progress before cutting their benchmark rate any further. Steady hiring and an expanding economy make it easier for the Fed to stay on the sidelines. Should companies start laying off workers and the unemployment rate rise, pressure could rise on the Fed to cut rates. On Thursday, Fed governor Chris Waller suggested a cut was unlikely at the central bank's March meeting, adding that Fed officials would like to see more data before making any further moves. Rick Gillespie, chief commercial officer at Columbus, Ohio-based Revive Environmental Technology LLC, said he is bullish about the prospects for the environmental contamination mitigation and water treatment company despite the uncertain economy. Revive, which currently has 34 full-time employees, plans to add a total of another 10 to 20 workers in Columbus, Ohio and Grand Rapids, Michigan, in the next few months, Gillespie said. Revive has found a way to destroy a toxic chemical called PFAS that is found in everyday items like nonstick cookware, waterproof weather jackets and cell phones and can end up in landfills, drinking water, and industrial waste water. Others are seeing a shakeout in the economy. Sheela Mohan-Peterson, who owns a franchise of the Patrice & Associates recruiting firm, said she's starting to get more resumes from top-level executives who worked at biotech and high tech companies. 'We're talking C Suite level'' - chief financial officers, chief technology officers, even a couple of CEOs, she said. She used to get maybe one of those resumes a month. Since the end of last year, she's seeing one or two a week. 'It has definitely accelerated in the last month,'' she said. Mohan-Peterson believes its fallout from the chaotic federal spending cuts.
