The number of Americans claiming unemployment benefits for the first time fell only slightly last week, dampening hopes of a pick-up in job creation in April after March’s slowdown.
The economic outlook darkened further, with other data on Thursday showing factory activity in the Mid-Atlantic region slowed sharply this month and home resales fell for a second month in March.
While analysts said part of the weakness in the data was payback after an abnormally warm winter, there was no doubt the economy was losing some steam, leaving the door open for further monetary stimulus from the Federal Reserve.
“Weather appears to be a strong factor which allowed some stronger-than-expected hiring and economic activity. Now we are seeing a correction of that,” said Robert Dye, chief economist at Comerica in Dallas.
“You also have those pesky seasonal adjustments. And you also have some genuine step-down in activity.”
The data comes ahead of the US central bank’s policy meeting this week. No major policy announcement is expected, but economists say further bond purchases or other quantitative easing measures later in the year cannot be ruled out, especially if labour market conditions weakensignificantly.
Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 386,000, the Labour Department said. The data was revised to show 8,000 more applications received than previously reported.
The four-week moving average for new claims, considered a better measure of labour market trends, rose 5,500 to 374,750.
In a separate report, the Philadelphia Federal Reserve Bank said its mid-Atlantic business activity index fell to 8.5 this month from 12.5 in March. While factories in eastern Pennsylvania, southern New Jersey and Delaware received fewer orders and shipped out less goods than the prior month, they hired more workers.
Stocks on Wall Street were little changed, while prices for Treasury debt rose. The dollar was flat against a basket of currencies.
The claims data covered the week for April’s non-farm payrolls survey. The four-week average of new applications rose marginally between the March and April survey periods, suggesting not much change in labour market conditions.
The March payrolls data earlier this month showed employers added 120,000 new jobs, the least since October, after averaging 246,000 jobs per month over the prior three months.
Most economists have viewed the pull-back in job growth as payback after the weather-induced gains in the previous months.
“Some of the improvement in the labour market earlier this year was probably due to the unseasonably mild weather,” said Jeremy Lawson, a senior economist at BNP Paribas in New York. “This data is consistent with the softer payrolls number in March.”
A third report showed home resales fell 2.6 per cent to an annual rate of 4.48 million units last month. But this report from the National Association of Realtors showed the supply of properties on the market tightened and prices inched higher, giving mixed signals about the pace of recovery in the still-struggling housing sector.