Applications for jobless aid rise 6,000

Consumer spending growth helps offset weakness in manufacturing, exports

Work continues on a Boeing 737-Max on the assembly line in Renton, Wash., in this file photo. The Commerce Department on Thursday said orders to U.S. factories jumped in January.
Work continues on a Boeing 737-Max on the assembly line in Renton, Wash., in this file photo. The Commerce Department on Thursday said orders to U.S. factories jumped in January.

WASHINGTON -- The number of people seeking unemployment benefits rose last week by 6,000 to a seasonally adjusted 278,000, highest since the end of January, the Labor Department said Thursday.

The numbers are low enough to suggest that layoffs are rare and the job market is healthy.

"There will be some volatility but that's normal," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, N.Y. "Claims will more or less stay at low levels. The job market remains strong."

The less-volatile four-week moving average slipped by 1,750 to 270,250, lowest since late November. The number of people collecting benefits has dropped 6.2 percent over the past year to 2.26 million.

The figures, released before today's government report on February job creation and unemployment, show the U.S. job market remains resilient in the face of economic weakness overseas and turmoil in financial markets. Applications are a proxy for layoffs, and have been at historically low levels for nearly a year. Employers appear confident enough in future growth to hold onto their staffs.

Job gains have been solid for the past three years, pushing the nation's unemployment rate down to an eight-year low of 4.9 percent. On Wednesday, the payroll processor ADP reported that U.S. businesses added 214,000 jobs in February, up from 193,000 in January.

Manufacturers have been hurt by the trouble overseas, cutbacks in the energy industry and a strong dollar that makes their goods more expensive in foreign markets. But their problems do not seem to be having a big impact on jobs. The labor market remains in good health, despite the troubles in the energy and manufacturing export sectors, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a report.

More Americans are shopping and eating out at restaurants, helping to offset drags from weaker growth overseas. Consumer spending accounts for about 70 percent of U.S. economic activity, and economists expect it will help bolster U.S. growth this year, even as manufacturing and exports likely remain weak. Americans are also spending more on big-ticket items such as cars and homes.

Economists forecast the U.S. economy will expand about 2.3 percent this year, consistent with the modest growth registered during the six-year recovery from the recession.

A separate report Thursday showed productivity fell less than forecast in the fourth quarter. The measure of output per hour of work dropped at a 2.2 percent annualized rate compared with an initially reported 3 percent decrease. Labor costs climbed 3.3 percent, revised down from a 4.5 percent gain.

The Labor Department said productivity -- the amount of output per hour of work -- fell at an annual rate of 2.2 percent in the October-December period.

For all of 2015, productivity rose just 0.7 percent, marking the fifth straight year of weak gains. It's a troubling trend given that productivity is a key ingredient needed for rising living standards. Rising productivity enables businesses to pay employees higher wages without having to boost the cost of the products and services they sell.

Orders to U.S. factories increased in January by the most in seven months, while a key category that tracks business investment plans rose by the largest amount in 19 months.

Factory orders rose 1.6 percent in January after two months of declines, the Commerce Department reported Thursday. It was the biggest jump since June, though it was driven by demand in the volatile category of commercial aircraft. At the same time, orders in a core sector that reflects business investment rose 3.4 percent -- the sharpest one-month gain since June 2014.

U.S. manufacturers' exports have been hurt this year by spreading economic weakness overseas and by a strong dollar, which has made their goods less competitive. And a sharp fall in oil prices has hurt investment.

Demand for durable goods -- items ranging from autos and appliances to airplanes and battleships -- increased 4.7 percent in January, slightly lower than the 4.9 percent the government had estimated in a preliminary report last week.

Information for this article was contributed by Paul Wiseman and Martin Crutsinger of The Associated Press and Shobhana Chandra and Jordan Yadoo of Bloomberg News.

Business on 03/04/2016

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