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While you were sleeping: Solid US jobless claims

While you were sleeping: Solid US jobless claims

Jan 10 (BusinessDesk) – A better-than-expected weekly US jobless claims report, following the solid private employers’ data released earlier this week, kept investors on edge for tomorrow’s government employment report.

The clear signs of an improving US jobs market are good news for the overall picture of recovery in the world’s largest economy, yet it may also prompt the Federal Reserve to accelerate the speed of tapering its bond-buying program.

Initial claims for state unemployment benefits fell more than expected, declining 15,000 to a seasonally adjusted 330,000 in the week ended January 4, according to Labor Department data.

"The labour market seems to have picked up some steam towards the end of the year," Guy Berger, an economist at RBS in Stamford, Connecticut, told Reuters.

The Labor Department’s non-farm payrolls report, due on Friday, is expected to show jobs increased by 196,000 in December, following an increase of 203,000 in November.

Meanwhile, Janet Yellen, who is set to take the mantle of Fed chairman when Ben Bernanke’s term expires on January 31, told Time magazine the US economy will gather steam this year.

“I think we’ll see stronger growth this year,” Yellen said. “Most of my colleagues on the Fed’s policy making committee and I are hopeful that the first digit [of GDP] could be 3 rather than 2.”

“The recovery has been frustratingly slow, but we’re making progress in getting people back to work,” she said.

Retailers provided a mixed picture today. Bed Bath & Beyond and Family Dollar slumped, down 13.1 percent and 5.2 percent respectively, after reporting earnings that failed to impress investors.

However, shares of Macy’s jumped, last up 7.7 percent, as the company provided an optimistic earnings outlook that won approval.

“They are running a good business and hats off,” Richard Jaffe, an analyst at Stifel Financial, told Bloomberg News. “The fact that they can take US$100 million of costs out of the equation is a nice thing. You can increase earnings by reducing costs. I’ll take it.”

In afternoon trading in New York today, the Dow Jones Industrial Average fell 0.12 percent, the Standard & Poor’s 500 Index slid 0.13 percent, while the Nasdaq Composite Index shed 0.25 percent. Declines in shares of Verizon Communications, last down 1.9 percent, and those of AT&T, down 1.8 percent, propelled losses in the Dow.

In Europe, the Stoxx 600 Index finished the day with a 0.4 percent decline from the previous close. The UK’s FTSE 100 dropped 0.5 percent, while Germany’s DAX and France’s CAC 40 both sank 0.8 percent.

As anticipated, the European Central Bank and the Bank of England kept their interest rates steady at record lows.

“The risks surrounding the economic outlook for the euro area continue to be on the downside. Developments in global money and financial market conditions and related uncertainties may have the potential to negatively affect economic conditions,” ECB President Mario Draghi warned today.

“Other downside risks include higher commodity prices, weaker than expected domestic demand and export growth, and slow or insufficient implementation of structural reforms in euro area countries.”

(BusinessDesk)


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