The report on U.S. unemployment was released by the Labor Department a day after the U.S. central bank finally managed to rise the federal fund rate. The rate was hiked by 25 basis points after more than nine years.
Analysts believe that job market shows signs of healing as demand for employees is strong as there are shortages in various sectors. Without a strong employment rate, the Fed rate hike would have been impossible.
Jobless claims fell 11,000 to 271,000 by Dec 12, the report shows. Officials noted that for the 10th consecutive month jobless claims stayed below 300,000 which is a limit considered to be a sign of a healthy labor market in the U.S. A similar situation was last recorded in the early 1970s.
On Wednesday, the Fed reported that the labor market recently improved while ‘underutilization’ of workforce was reduced considerably since the start of the year. On the other hand, despite positive reports, the manufacturing industry is still struggling with a strong currency, weak exports, and inventory builds.
For instance, the Philadelphia officials reported last month that manufacturing industry saw its activity sink by -5.9 pts, which is the third time the activity is on a negative slope in four months.
In the mid-Atlantic, factories still struggle with a weak demand, despite a slight increase in shipments. Inventories expanded for the first time in months. A recent survey revealed this month that manufacturing sector contracted for the first time since 2012. Manufacturing makes 12 percent of the nation’s economy.
The Labor Department report also shows that jobless claims slipped 500 in the last four weeks, while nonfarm payrolls saw an increase of 211,000 in the last month. Federal experts expect that payrolls grow even more by 200,000 by the end of this month.
Nevertheless, experts are now more concerned over a strengthening dollar, which already wreaked havoc with companies’ profits and global demand for U.S. products and services. The currency is now responsible for a widening account deficit, which is the largest in almost seven years.
The current account deficit, which is an indicator of how much capital, goods and services go in and out the U.S., is currently under a lot of pressure from a rise in federal grants and pensions, remittances, and payments made to investors located outside the U.S.
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