US Unemployment Claims Rise, Philly Fed Shows Manufacturing Slump

Highlights

• U.S. unemployment claims increase, indicating labor softening.
• Philly Fed survey reveals manufacturing sector weakness.
• Firms report moderated future price increase expectations.

U.S. Weekly Unemployment Claims Show an Increase

The latest U.S. unemployment data indicates a rise in initial claims, reaching 231,000 for the week ending November 11, marking an increase from the previous week. This rise in initial claims, coupled with an uptick in the four-week moving average, reflects a slight softening in the labor market. The insured unemployment rate also increased slightly, reaching its highest level since late November 2021.

Philly Fed November Survey Highlights Weak Manufacturing Activity

The November 2023 Philly Fed Manufacturing Business Outlook Survey reveals continuing weakness in the manufacturing sector. The diffusion index for current general activity remained negative, and indicators such as new orders and shipments showed a decline. Employment levels remained mostly steady, but the average workweek index fell further into negative territory.

Price Trends and Inflation Expectations

Despite the general slowdown, firms continue to report increases in input prices, although at a reduced rate compared to previous months. The prices received index remains steady, indicating ongoing pressure on prices. Firms’ expectations for future price increases for their products have declined, reflecting a more moderate outlook on inflation.

Future Outlook Remains Subdued

Future indicators softened in November, with the diffusion index for future general activity turning negative for the first time since May. Expectations for new orders and shipments are mixed, while employment expectations show a modest increase. Capital expenditure expectations remain negative, suggesting caution among manufacturers about future investments.

Summary: Mixed Signals in Employment and Manufacturing

The latest data presents mixed signals for the U.S. economy. While unemployment claims have risen, indicating potential labor market challenges, the manufacturing sector continues to face headwinds with weak activity and subdued future expectations. Price pressures persist, although firms’ expectations for future price increases have moderated, offering a nuanced view of the inflation outlook. Overall, the short-term economic forecast appears cautiously optimistic but tempered by these mixed signals in key sectors.