By Nick Kariuki
Better-than-expected readings on weekly unemployment claims and manufacturing temporarily allayed investor fears of an economic slowdown Thursday.
Initial claims for unemployment insurance, seasonally adjusted, dropped to their lowest level in 14 years, the Department of Labor reported.
“The trend in claims has clearly been improving lately which is a favorable sign for the labor market and and a welcome relief given the weakness that has shown up in a few other recent economic indicators,” JPMorgan Chase Bank economist Daniel Silver wrote in a report Thursday.
Initial claims fell by 23,000 to 264,000 for the week ended Oct. 11, from 287,000 in the prior week. Economists had expected jobless claims in the week to rise to 290,000, according to a Bloomberg survey.
It was the fifth consecutive week that initial claims were below the 300,000 mark and the lowest the number has been since April 15, 2000, when claims were 259,000.
The four-week moving average, which smooths out weekly fluctuations, decreased by 4,250 to 283,500 from 287,750, the lowest average since June 10, 2000.
Also Thursday, the Federal Reserve reported that industrial production increased 1 percent in September, beating the 0.4 percent rise economists expected. The capacity utilization rate, which measures how much of potential factory output is being used, rose 0.6 percent to 79.3 percent.
“Industrial production and unemployment claims together provided a ray of light today in an otherwise cloudy mood for markets,” wrote Diane Swonk, chief economist at Mesirow Financial. “We need to see more consistent upside surprises to allay the almost irrational fears that seem to have taken hold of markets in recent days.”