Applications for U.S. unemployment benefits remained below 300,000 for a 14th straight week, a sign of labor market strength that will help fuel U.S. growth.
Jobless claims rose by 2,000 to 279,000 in the week ended June 6, a Labor Department report showed Thursday in Washington. The median forecast of 48 economists surveyed by Bloomberg called for 275,000. The four-week average of initial applications also crept up.
The data indicate employers are retaining workers in anticipation of a pickup in demand this quarter after a slow start to the year. Combined with a spring spurt in payrolls, the employment picture bodes well for household spending, the biggest part of the economy.
“There’s not much going on in the way of layoffs, they remain low,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, who projected claims of 280,000. “The labor market is reasonably good. Consumer spending is getting support from the labor market clearly and from some income growth.”
Another report Thursday showed a pickup in May retail sales. The Commerce Department said purchases last month jumped 1.2 percent, reflecting broad-based gains from auto dealers to clothing retailers to department stores, after a 0.2 percent April gain.
Since the first week of March, applications for unemployment benefits have been below the 300,000 level that economists say is consistent with an improving job market.
This is encouraging since I have read that at least 40,000 people have been laid off in the US energy industry over the last several months, mainly from the shale oil sector.
Better economic figures since weak Q1 are certainly welcome although they have been pushing US 10-Yr Treasury yields higher, at least until today as we have just seen a downside key day reversal. This suggests a temporary pause and consolidation before Treasury yields resume their recovery.
Further evidence that leading economies are gradually recovering from the severe credit crisis recession of 2008/9, which also coincided with the last big spike in crude oil prices, should be emerging over the lengthy medium term. This is a factor behind firming government bond prices and the choppier environment for global stock markets which we appear to have re-entered.
In contrast, US broad indices such as the S&P 500, DJIA, Nasdaq Composite and Russell 2000 have been less volatile. This will inevitably change at some point but forecasts of a significant bear market remain premature, judging from the relative strength presently shown by the S&P 500 Banks Index and also the KBW Regional Banking Index. These are a leading indicator for bear markets, as you can last see in 2007.
Lastly, I maintain that iconic Apple will remain an important influence on US equities, and not just because of its weighting. When Apple next breaks downwards beyond a normal reaction and consolidation, as we last saw in 2012, that will likely affect confidence and coincide with another cyclical (20% plus) bear market for US indices.Back to top