Home MMBIZ News US Jobs Picture Improving, Manufacturing May Be Slowing

US Jobs Picture Improving, Manufacturing May Be Slowing

The number of Americans filing new claims for unemployment aid unexpectedly fell last week, but continued weakness in business spending on capital goods suggested slower economic growth in the fourth quarter.

Initial claims for state jobless benefits fell 10,000 to a seasonally adjusted 316,000, the Labor Department said on Wednesday last week. The second straight week of declines defied economists’ expectations for a rise in claims to 330,000 and raised hopes for strong payroll growth in November.

“We are at a level that, if sustained, would point to solid job gains ahead. There is also a good chance that the October payroll gain may not have been an aberration,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

Employers added 204,000 new jobs to their payrolls last month, far more than expected, fanning speculation that the US Federal Reserve might start to wind down its economic stimulus sooner rather than later.

The improving labour market tone has helped to boost consumer sentiment. The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment increased to 75.1 for November, up from a final reading of 73.2 in October.

But while the labour market picture is firming, businesses appear to be cautious about investment spending.

A separate report from the Commerce Department showed non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 1.2 percent last month.

It was the second monthly decrease in these so-called core capital goods. The data surprised Wall Street economists who had expected a gain, partly because private surveys of national factory activity had shown strength in October.

“The picture of manufacturing strength from survey data is not being captured in the government-collected data on new orders and this divergence is a puzzle,” said John Ryding, chief economist at RDQ Economics in New York.

Nevertheless, the latest report suggested some ebbing in the factory sector’s momentum, and hinted that a 16-day partial government shutdown last month hurt business confidence.

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