5 Min Read
WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment aid edged up last week for a third straight week, but the underlying trend continued to point to solid momentum in the labor market.
Still, the rise in jobless claims and other data on Thursday showing weak new home sales in March and factory activity this month could heighten concerns about the economy's ability to rebound strongly after stumbling at the start of the year.
Growth braked sharply as the economy was slammed by harsh winter weather, weak global demand and a now-settled labor dispute at West Coast ports. Activity also was constrained by a strong dollar as well as lower energy prices, which cut into domestic oil production.
Initial claims for state unemployment benefits increased 1,000 to a seasonally adjusted 295,000 for the week ended April 18, the Labor Department said. Despite the increase, claims remained for a seventh consecutive week below the 300,000 threshold, a level associated with a strengthening labor market.
"Overall, the level of claims remains low and is consistent with a healthy labor market," said Michael Feroli, an economist at JPMorgan in New York.
Stocks on Wall Street were trading higher as a rise in crude oil prices offset disappointing quarterly results from a handful of large companies including Procter & Gamble Co (PG.N), which reported a steeper-than-expected drop in sales.
Prices for U.S. government debt rose, while the dollar fell against a basket of currencies.
Last week's claims covered the period during which the government canvassed employers for April's nonfarm payrolls report. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, increased 1,750 last week to 284,500.
The four-week average of claims fell 20,750 between the March and April survey periods, suggesting an acceleration in job growth. Employment growth slowed sharply in March, with nonfarm payrolls increasing by only 126,000, ending a 12-month stretch of gains above 200,000.
But with the weakness mostly concentrated in the weather-sensitive leisure and construction sectors, economists downplayed the slowdown.
"The trend in claims ... continues to impress and runs counter to the disappointment we saw in the March payrolls report, suggesting it may be too early to draw conclusions about the strength of the labor market from that one report," said Derek Lindsey, an analyst at BNP Paribas in New York.
Federal Reserve officials have said they would like to see further improvements in the labor market before raising interest rates. The faltering economic growth early in the first quarter has made a June rate hike less likely.
The U.S. central bank has kept its short-term interest rate near zero since December 2008.
In a separate report, the Commerce Department said new home sales declined 11.4 percent in March to a seasonally adjusted annual rate of 481,000 units.
The drop, which was the biggest since July 2013, followed three straight months of hefty gains, and February's sales pace was revised up to the highest level in seven years.
New home sales, which account for 8.5 percent of the market, were up 19.4 percent from a year ago.
"The trend is our friend when you take a step back and see that new home sales are up significantly compared to this time last year. We also saw supply increase, which will help consumers as the spring home buying season kicks off," said Bill Banfield, vice president at Quicken Loans in Detroit.
The outlook for the housing market remains upbeat against the backdrop of a strengthening labor market and moves by the government to ease credit conditions for first-time buyers.
Data on Wednesday showed that sales of previously owned homes hit an 18-month high in March, while applications for home loans last week vaulted to the highest level since June 2013.
In a third report, financial data firm Markit said factory activity slowed in early April, but remained in expansionary territory. Manufacturers reported a decline in export orders, which they blamed on the stronger dollar and weak demand in Europe.
Reporting by Lucia Mutikani; Editing by Paul Simao