Jobless claims drop; labour market slack shrinking
The number of Americans filing for unemployment benefits fell last week, unwinding half of the prior period’s jump and suggesting the labour market was tightening despite a recent slowdown in job growth. Initial claims for state unemployment benefits declined 10,000 to a seasonally adjusted 245,000 for the week ended June 3, the Labour Department said on Thursday. Claims surged by 20,000 in the prior week, with California, Tennessee, Kansas, and Missouri accounting for the bulk of the increase. Some of that increase was related to school summer breaks in which bus drivers and cafeteria workers were left temporarily unemployed. Claims have now been below 300,000, a threshold associated with a healthy labour market, for 118 straight weeks. That is the longest such stretch since 1970, when the labour market was smaller. The labour market is near full employment, with the jobless rate at a 16-year low of 4.3 percent. Economists polled by Reuters had forecast first-time applications for jobless benefits falling to 240,000 in the latest week. Prices of U.S. Treasuries were lower while U.S. stock index futures were modestly higher after the data. The dollar was firmer against a basket of currencies. A Labour Department official said there were no special factors influencing the data. Only claims for Louisiana were estimated.
ECB Drops Guidance on Rate Cuts in Step Toward Stimulus Exit
The European Central Bank ruled out further interest-rate cuts in a sign that it’s moving closer to an exit from its stimulus program.The Governing Council, meeting in Tallinn on Thursday, dropped its guidance that rates might fall further, saying only that it now expects borrowing costs to stay at present levels for an extended period. Policy makers reiterated their pledge to increase the size or duration of their bond-buying program if the economy deteriorates. While the improving economy has sparked a debate about policy, it wasn’t a certainty how far the ECB would change its guidance at this meeting. President Mario Draghi and his closest allies had sought to talk down expectations for any major shift, arguing the ECB must be extremely cautious in communicating any exit from stimulus amid a lack of convincing inflationary pressure.
China’s Exports Rise in May as Global Trade Outlook Brightens
China’s overseas shipments accelerated from a year earlier in May, aided by more buoyant global demand, and robust imports signaled resilience in the domestic economy.
- Exports rose 8.7 percent in May in dollar terms, more than the 7.2 percent increase forecast by economists in a Bloomberg survey
- Imports surged 14.8 percent in dollar terms, more than the 8.3 percent forecast
- The trade surplus widened to $40.81 billion
A brighter international outlook is supporting China’s manufacturing machine, with the World Trade Organization saying it expects trade to “expand moderately” in the second quarter. After a solid start to the year, the domestic economy had shown signs of weakening momentum, though May’s robust import figures could imply that domestic demand will hold up. While China’s import data can sometimes be skewed by big moves in commodity prices–it’s the world’s top ore buyer–the value of commodities remained broadly stable over May.