The U.S. economy keeps churning up new signals of sustained strength.
Jobless Claims. Filing for unemployment benefits fell to the lowest level in almost 45 years, Labor Department figures showed Thursday.
Jobless claims fell by 41,oooo to 220,00, far below the 249,000 expected by economists. That’s the lowest level since 1973. The drop in claims suggests that employers are holding on to employees as the labor market tightens. The numbers may also reflect companies’ reaction to the tax cuts, with some employers being hesitant to let employees go so soon after a massive corporate tax cut.
On Wednesday, the Federal Reserve’s beige book cited anecdotal evidence that some employers are having trouble finding workers to fill positions in manufacturing and construction. That could point toward rising wages as employers offer better compensation to lure away already employed workers.
It’s likely that the official unemployment rate, already very low at 4.1 percent, could fall even further.
Fourth Quarter GDP Looks Stronger. The Atlanta Fed’s latest forecast for gross domestic product, a broad measure of economic output, rose Thursday to 3.4 percent. It was boosted by the Fed’s release of industrial production figures a day earlier. The New York Fed’s forecast, due to be updated Friday, stands at 3.9 percent.
These are some of the final forecasts of GDP before the official figures are released January 26.
Manufacturing Growth Still Strong. The Philadelphia Fed’s survey of manufacturing business showed that this sector continues to grow in January, although a few measures slipped below the very strong figures for December. Businesses reported an increase in manufacturing employment overall, with 24 percent saying they hired more workers and just eight percent saying they employed fewer. The average workweek also increased, indicating increased activity among those employed in manufacturing.
The outlook for the future looks strong. Seventy-two percent of firms reported that they expect an increase in underlying demand in the first quarter of this year, with 12 percent saying the increase would be significant. Nearly 70 percent expect to increase production.