Dhe number of initial jobless claims in the United States has recently turned out to be higher than expected and is fueling concerns about the economy. A total of 228,000 Americans applied for government assistance last week, the Washington Department of Labor said on Thursday. Economists polled by Reuters had only expected 200,000. At the same time, the number of applications for the previous week was significantly increased in a revision – to 246,000 from 198,000. According to Allianz advisor Mohamed El-Erian, the surprisingly high figures are causing market concern about the pace of the US economic slowdown.
And bad economic news would become “bad news for stocks,” the economist warned via Twitter. Wall Street opened lower after the initial claims data. The data is another indication that the series of rate hikes in the US is weighing on economic growth. The government’s labor market report is due on Friday. Economists are expecting nonfarm payrolls to rise by 239,000 from 311,000 in February.
The Fed, which is striving for full employment and stable prices, wants to curb escalating inflation and at the same time cool down the overheated labor market. However, the latest data indicate that the important service sector has now lost a noticeable amount of momentum and that industry is going down more sharply. “The latest economic data from the USA have all been disappointing, the signs are pointing to recession,” says Jürgen Molnar from the broker Robomarkets.
Given the currently uncertain economic outlook, it remains to be seen whether the Fed will raise the key interest rate further beyond the current range of 4.75 to 5.00 percent at the beginning of May. The US currency guardian Loretta Mester recently said that it was still too early for an assessment. In a speech on Tuesday, however, the head of the Cleveland Fed district hinted that the end of the road for hikes this year is not likely to have been reached yet. In their outlook, the US monetary authorities had targeted an average interest rate level of over five percent by the end of the year in March.