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Jobless Claims Remain Near 46-Year Lows

Karl Schamotta March 14, 2019

The number of Americans filing requests for unemployment benefits rose slightly last week but remained near levels consistent with a strong job market. Initial claims increased 6,000 to a seasonally-adjusted 229,000 for the week ended March 9th.

Markets had expected initial claims to rise to 224,000 from the 223,000 reported for the prior week.

The four-week moving average slipped 2,500 to 223,750, providing more evidence that a surprisingly-weak February non-farm payrolls report was not indicative of deeper problems in the labour market.

A separate data release from Bureau of Labor Statistics showed a 0.6-percent jump in import prices during February, with higher petroleum and natural gas costs driving the increase. With fuel excluded, prices were unchanged, and are down 1.3 percent on a year-over-year basis. This means the United States is not importing inflation from the world, and that the Federal Reserve should be able to maintain its newly-adopted “patient” stance on further interest rate increases for longer. The dollar is softer against other majors.

The pound remains slightly stronger after British Members of Parliament voted to rule out a no-deal Brexit – but continues to run into headwinds as investors prepare for a third (and possibly fourth) “meaningful vote” before the originally-scheduled exit date. Parliament is expected to approve a postponement later today, giving politicians time to debate the issue further.

In comments after yesterday’s decision, Prime Minister Theresa May said that if an agreement can be struck before the next European summit on March 20th, she would ask for a short extension to the March 29th deadline. If she is unable to further narrow the margin of approval, she will ask for a longer delay.

After several resounding defeats, a majority remains a distant prospect, but signs are emerging to suggest that pro-Brexit parliamentarians and Democratic Unionists are closer to accepting some variation on the deal. With odds on a second referendum or general election (both carrying the potential to reverse the process) rising by the day, the Prime Minister’s strategy appears designed to put Brexiteers between a rock and a hard place – possibly forcing them to capitulate at the last moment.

Bottom Line: The number of layoffs occurring in the jobs market remains incredibly low, suggesting that recent increases in pay and benefits are likely to continue – providing additional propellant for an economy that continues to outperform its global rivals. Even with many of the world’s problems originating on its shores, the United States remains a rock in a sea of troubles.

Karl Schamotta
Chief Market Strategist

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