US weekly jobless claims rise slightly; trade deficit contracts sharply
2024.12.05 11:32
By Lucia Mutikani
WASHINGTON (Reuters) -The number of Americans filing new applications for unemployment benefits rose slightly last week, pointing to steadily easing labor market conditions heading into the final stretch of 2024.
Sluggish hiring, however, means some people who lose their jobs are remaining on unemployment rolls longer relative to early this year.
“The initial claims data are consistent with a labor market that is still characterized by limited layoffs,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 224,000 for the week ended Nov. 30, the Labor Department said on Thursday. Economists polled by Reuters had forecast 215,000 claims for the latest week.
The data included the Thanksgiving holiday, which could have injected some noise. Claims are entering a period of volatility, which could make it difficult to get a clear picture of the labor market.
Unadjusted claims dropped 34,967 to 210,166 last week amid a 9,777 plunge in filings in California and 6,383 tumble in Texas. There were also sizeable declines in Florida and North Carolina as the effects of Hurricanes Helene and Milton faded.
Other states reporting notable decreases included Georgia, New York, Wisconsin and Illinois.
Claims remain at levels consistent with steady job growth, and have signaled a sharp rebound in nonfarm payrolls in November after the labor market was severely distorted by Helene and Milton as well as strikes by factory workers at Boeing (NYSE:) and another aerospace company.
Nonfarm payrolls likely increased by 200,000 jobs in November after rising by 12,000 in October, the lowest number since December 2020, a Reuters survey showed. The jobless rate is forecast rising to 4.2% last month from 4.1% in October.
The historically low layoffs account for most of the labor market’s strength. Hefty interest rate hikes from the Federal Reserve in 2022 and 2023 to tame inflation have left companies with little appetite to hire more workers.
The Fed’s Beige Book report on Wednesday described employment as “flat or up only slightly” across the U.S. central bank districts in November. It also noted “hiring activity was subdued as worker turnover remained low and few firms reported increasing their headcount,” adding “the level of layoffs was also reportedly low.”
The number of people receiving benefits after an initial week of aid, a proxy for hiring, fell 25,000 to a seasonally adjusted 1.871 million during the week ending Nov. 23, the claims report showed.
Unadjusted so-called continuing claims increased by 5,927 in Washington state, likely because of the lingering effects of the Boeing strike. They also rose considerably in Minnesota, but fell sharply in California, Florida and Georgia.
IMPORTS DECLINE
The Fed is widely expected to cut rates this month for the third time since launching its easing cycle in September. The central bank’s policy rate is in the 4.50%-4.75% range, having been hiked by 525 basis points in 2022 and 2023.
The rate outlook for 2025 is uncertain amid threats of tariffs and tax cut promises from President-elect Donald Trump’s incoming administration, which economists have said would raise prices and increase government borrowing.
A separate report from the Commerce Department’s Bureau of Economic Analysis showed the trade deficit contracted 11.9% to $73.8 billion in October as imports declined by the most since late 2022, potentially positioning trade to contribute to economic growth this quarter.
Economists had forecast the trade deficit easing to $75.0 billion. Imports dropped 4.0%, the biggest decrease since November 2022, to $339.6 billion. Goods imports tumbled 5.5% to $269.3 billion.
Businesses worried about Trump’s threats to raise tariffs could try to front load imports, which would reverse October’s drop. Trump has said he would impose a 25% tariff on all products from Mexico and Canada and an additional 10% tariff on goods from China on his first day in office.
Worries about a potential dock workers strike in January could also see businesses scrambling to get more imports in.
“We could be in for an extended period of wildly fluctuating trade data well into 2025,” said Stephen Stanley, chief U.S. economist at Santander (BME:) US Capital Markets.
Imports of capital goods decreased $7.5 billion, weighed down by declines in imports of computers and semiconductors. Imports of industrial supplies and materials, which include petroleum, fell $3.3 billion. Petroleum imports at $17.2 billion were the lowest since June 2021.
There were also decreases in imports of consumer goods, mostly pharmaceutical preparations. Imports of automotive vehicles, parts and engines also fell.
Imports of services rose $1.4 billion to a record high $70.2 billion, boosted by travel, charges for the use of intellectual property, transport, insurance and other business services.
Exports fell 1.6% to $265.7 billion. Goods exports dropped 3.0% to $170.7 billion, led by a $3.9 billion decrease in capital goods exports.
Shipments of automotive vehicles, parts and engines also fell as did industrial supplies and materials, and consumer goods. Exports of services increased $1.0 billion to an all-time high of $95.1 billion. They were lifted by travel, other business services, maintenance and repair, transport and charges for the use of intellectual property. Exports of telecommunications, computer and information services also rose.
The goods trade deficit narrowed 9.5% to $98.7 billion. It decreased 7.3% to $92.4 billion when adjusted for inflation.
Trade subtracted 0.57 percentage point from GDP in the July-September quarter. It has been a drag on economic growth for three straight quarters. The economy grew at a 2.8% annualized rate in the July-September quarter.
