US jobs, factory data show improvement; housing lags
Saturday, 22 March 2014 00:00
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REUTERS: The number of Americans filing new claims for unemployment benefits held near three-month lows last week and factory activity in the Mid-Atlantic region accelerated in March, indicating the economy was pulling out of recent weather-induced lull.
Other data on Thursday, however, suggested housing could take a while to regain strength. Home resales fell to a 1-1/2 year low in February, marking the second month of decline.
Initial claims for state unemployment benefits increased 5,000 to a seasonally adjusted 320,000, the Labour Department said, less than economists’ expectations for a rise to 325,000 in the week ended 15 March.
In a separate report, the Philadelphia Federal Reserve Bank said its business activity index rebounded to 9.0 in March from -6.3 in February. Any reading above zero indicates expansion in the region’s manufacturing.
US stocks edged higher after the data.
An unusually cold and snowy winter disrupted economic activity early in the first quarter, and slowed job growth.
Federal Reserve Chair Janet Yellen said on Wednesday harsh weather had played an important role in the economy’s weakness in the first quarter, adding that labour market conditions continued to improve.
The US central bank announced further cuts to its bond-buying program. Yellen suggested the program could end this fall, with interest rates rising around six months later.
The four-week moving average for new jobless claims, considered a better measure of underlying labour market conditions as it irons out week-to-week volatility, hit its lowest level in more than three months last week.
Last week’s claims data covered the period for the government’s nonfarm payrolls survey for March.
Claims fell 14,000 between the February and March survey periods, suggesting further improvement in job growth, which had slowed at the end of 2013 and the beginning of this year because of severe weather.
“Layoffs have experienced a small underlying improvement during the first half of March. That would be consistent with expectations of a bounce in employment growth in March,” said Guy Berger, an economist at RBS in Stamford, Connecticut.
Housing still weak
In another report, the National Association of Realtors said sales of previously owned homes slipped 0.4% to an annual rate of 4.60 million units.
That was the lowest level since July 2012. Home resales, which peaked in July, have declined in six of the last seven months.
While bad weather has hampered sales, housing market fundamentals have weakened somewhat since last summer following a run-up in mortgage rates. High borrowing costs and steep prices have made houses less affordable for many Americans.
The median price for a previously owned home rose 9.1% in February from a year ago.
In addition, there have not been enough properties on the market for sale.
“The broader trend is still one of weak underlying demand, as existing home sales have been declining across the country ever since last summer’s interest rate shock,” said Laura Rosner, an economist at BNP Paribas in New York.
