- John Ryding and Conrad DeQuadros, economists for RDQ Economics
The number of Americans applying for unemployment benefits increased slightly more than expected, but the underlying trend continued to point the labour market was tightening. Initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 274,000 in the week ended May 16, according to the Labor Department. Even though claims increased, they remained below 300,000, a threshold associated with a strengthening labour market, for an 11th consecutive week. The four-week moving average of claims, considered a better gauge of labour market trends as it strips out week-to-week volatility, dropped 5,500 last week to 266,250, marking the lowest level since April 2000.
Meanwhile, manufacturing activity across the US unexpectedly declined to the lowest level in 16 months in May. Yet the US factory activity is still some way ahead of the rest of the world. Markit's manufacturing PMI dropped to 53.9 in the reported month, compared with 54.1 recorded in the preceding month. A separate report showed sales of previously owned homes dropped in April. Existing home sales fell 3.3% last month from March to a seasonally adjusted annual rate of 5.04 million. The National Association of Realtors also reported that the median price of an existing home climbed to $219,400 in April, up 8.9% from the prior year.
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