US jobless claims rise unexpectedly

<p>The data renewed the debate on the timing of a Fed rate hike.</p>

The number of people filing new applications for unemployment benefits in the US rose last week. Initial jobless claims increased by 5,000 to 274,000 in the week ended August 8th, the Labor Department said today (August 13th).

Economists surveyed by The Wall Street Journal had forecast 270,000 new applications for jobless benefits last week.

Although claims have risen for three consecutive weeks, analysts believe this a sign layoffs have stabilised and the economy is adding jobs. The four-week moving average declined to the lowest level in more than 15 years.

US employers added a seasonally adjusted 215,000 jobs to payrolls in July, with the unemployment rate standing at 5.3 per cent, the lowest level in seven years.

"Signs of improvement"

“We haven’t seen claims at a 300,000 level since February and the economy has shown a lot of signs of improvement since then, ignoring what’s going on beyond the borders,” Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, told Bloomberg.

The figures are adding to the case for an interest rate hike as early as September. A debate has been going on for months about when the US Federal Reserve will start raising interest rates from historical lows.

New York Fed President William Dudley said on Wednesday (August 12th) that the central bank is approaching the moment when it can start raising interest rates.

Federal Reserve Chairwoman Janet Yellen said that a rate hike is on the cards for 2015. She added that if the US economy continues to strengthen, "it will be appropriate at some point this year to take the initial step to raise the federal funds rate".

However, analysts believe the likelihood of a September rate hike has declined after the surprise decision from the People’s Bank of China to devalue the yuan for three consecutive days this week.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.