Unemployment Claims in the US Increase, Philadelphia Federal Reserve Indicates a Decline in Manufacturing.

Increasing US jobless claims and an unfavorable Philly Fed survey indicate a weakening job market and a decrease in manufacturing activity.

Highlights

• The number of jobless claims in the U.S. is on the rise, signifying a weakening labor market.
• The Philadelphia Federal Reserve's survey exposes weaknesses in the manufacturing sector.
• Businesses note a decrease in their expectations for future price increases.

The most recent U.S. unemployment figures indicate an increase in initial claims, reaching 231,000 for the week ending November 11, showing a rise from the prior week and suggesting a slight softening in the labor market. Alongside this, the insured unemployment rate also saw a slight uptick, hitting its highest level since late November 2021.

Regarding the November 2023 Philly Fed Manufacturing Business Outlook Survey, it highlighted continued weaknesses within the manufacturing sector. The current general activity index remained negative, with indicators such as new orders and shipments showing a decline. While employment levels remained relatively stable, the average workweek index fell further into negative territory.

Despite the overall slowdown, businesses still reported increases in input prices, albeit at a reduced rate compared to recent months. The prices received index remained consistent, signaling ongoing price pressures. However, firms' expectations for future price increases have diminished, reflecting a more moderate outlook on inflation.

Looking ahead into the future, November's indicators softened, with the future general activity index turning negative for the first time since May. Expectations for new orders and shipments varied, while employment expectations showed a slight increase. Capital expenditure expectations remained negative, indicating caution among manufacturers about future investments.

In summary, the latest data presents conflicting signals for the U.S. economy. While unemployment claims have increased, potentially indicating labor market challenges, the manufacturing sector continues to encounter difficulties with subdued activity and future expectations. Although price pressures persist, firms' forecasts for future price increases have moderated, offering a nuanced view of the inflation outlook. Overall, the short-term economic forecast appears cautiously optimistic but influenced by these mixed signals in pivotal sectors.