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US weekly jobless claims at 16-month low; homebuilding takes breather

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US weekly jobless claims at 16-month low; homebuilding takes breather
© Reuters. FILE PHOTO: A sign advertising job openings is seen outside of a Starbucks in Manhattan, New York City, New York, U.S., May 26, 2021. REUTERS/Andrew Kelly/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits fell last week to the lowest level in nearly 1-1/2 years, suggesting job growth likely remained solid in January.

The unexpected decline in initial claims reported by the Labor Department on Thursday added to strong retail sales growth in December in painting an upbeat picture of the economy, and could make it difficult for the Federal Reserve to start cutting interest rates in March as financial markets anticipate.

“The labor market remains strong and reinforces our view that the Fed is likely to hold rates at current levels until the middle of 2024,” said Eugenio Aleman, chief economist at Raymond James.

Initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 187,000 for the week ended Jan. 13, the lowest level since September 2022. Economists polled by Reuters had forecast 207,000 claims for the latest week.

Claims data tend to be volatile at the turn of the year. Some of the volatility relates to fewer layoffs after the holidays than is normal.

While that could have contributed to some of the drop in claims, economists said the data was consistent with a fairly tight labor market. They noted that companies generally remained reluctant to lay off workers following difficulties finding labor during and after the COVID-19 pandemic.

Unadjusted claims decreased 29,543 to 289,228 last week, with filings plunging by 17,176 in New York.

There were also significant declines in Michigan, Pennsylvania, Wisconsin, South Carolina, Georgia and Minnesota, which more than offset notable increases in California, Iowa, Kansas and Texas.

“Seasonal layoffs after the holiday season have been milder than usual, leading to a decline in the published seasonally adjusted level of claims,” said Lou Crandall, chief economist at Wrightson ICAP (LON:). “This is not an example of a seasonal ‘distortion’ because the labor market tightness that is making employers wary of laying workers off temporarily is real.”

Stocks on Wall Street were mixed while the dollar rose against a basket of currencies. U.S. Treasury prices fell.

Financial markets have lowered their bets for a rate cut at the U.S. central bank’s March 19-20 policy meeting to below 60%, according to CME Group’s (NASDAQ:) FedWatch Tool.

Fed Governor Christopher Waller said this week that the economy was “doing well” and giving the U.S. central bank “the flexibility to move carefully and methodically.”

The Fed has hiked its policy rate by 525 basis points to the current 5.25%-5.50% range since March 2022.

JOBLESS ROLLS SHRINK

The claims data covered the period during which the government surveyed employers for the nonfarm payrolls component of January’s employment report.

Claims fell between the December and January survey period, suggesting that strong job growth persisted this month. The economy added 216,000 jobs in December.

Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, will offer more clues on the state of the labor market in January.

The so-called continuing claims decreased 26,000 to 1.806 million during the week ending Jan. 6, the lowest since October, the claims report showed.

Homebuilding paused in December after strong gains in the prior three months.

Single-family housing starts, which account for the bulk of homebuilding, fell 8.6% to a seasonally adjusted annual rate of 1.027 million units last month, the Commerce Department’s Census Bureau said in a separate report. Wet weather last month likely contributed to the plunge in homebuilding.

Single-family starts increased 15.8% on a year-on-year basis as a shortage of previously owned houses for sale fuels demand for new construction. Permits for future construction of single-family homes increased 1.7% to a pace of 994,000 units last month, the highest level since May 2022.

That aligns with a recent sharp improvement in homebuilder sentiment and reflects declining mortgage rates.

The perennial inventory shortage has combined with still high mortgage rates to weigh on sales of previously owned homes. But new construction demand is boosting residential investment, which rebounded in the third quarter after nine straight quarterly decreases, supporting the economy.

Starts for housing projects with five units or more increased 7.5% to a rate of 417,000 units in December.

Overall housing starts fell 4.3% to a rate of 1.460 million units in December. Starts declined 9.0% to 1.413 million units in 2023. Multi-family building permits rose 1.4% to a rate of 449,000 units last month. Building permits as a whole increased 1.9% to a rate of 1.495 million units. They dropped 11.7% to 1.470 million units in 2023.

The single-family homebuilding backlog rose 0.7% to 140,000 units last month, while the rate for completions jumped 8.4% to 1.056 million units, the highest level since November 2022. The inventory of single-family housing under construction decreased 1.2% to a rate of 671,000 units.

Housing completions increased 4.5% to 1.453 million units in 2023. According to the National Association of Realtors, the inventory of previously owned homes on the market is just above 1 million units, well below nearly 2 million units before the COVID-19 pandemic. Realtors estimate housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to bridge the inventory gap.

“More supply is still needed,” said Orphe Divounguy, a senior economist at Zillow (NASDAQ:). “Due to more than a decade of underbuilding, a significant shortage of housing options is fueling America’s housing affordability crisis.”

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Palestinians say Israeli strike killed 22 in shelter, army says militants hit

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By Dawoud Abu Alkas and Nidal al-Mughrabi

GAZA/CAIRO (Reuters) -Palestinians said an Israeli strike killed at least 22 people in a school sheltering displaced people in southern Gaza City on Saturday, while the Israeli military said the attack targeted a command centre of militant group Hamas.

The Gaza health ministry said most of those killed were women and children. The Hamas-run government media office said 13 children and six women were among the dead.

The military said it hit a Hamas command centre embedded in the compound that previously served as a school, repeating an accusation that the group uses civilian facilities for military purposes. Hamas denies that.

Reuters footage from the site showed blasted walls, wrecked and burnt furniture, and holes in the ceiling of one room as people tried to salvage what they could of belongings.

“The women and their children were sitting in the playground of the school, the kids were playing, and suddenly two rockets hit them,” said one witness Said Al-Malahi.

Some of the dead were wrapped in blankets and carried away on donkey carts, as ambulances transferred other bodies.

“I couldn’t take it, I did not see a single man that is injured, it was all women and children, let the Arab countries rejoice, let them rejoice and clap for (Israeli Prime Minister Benjamin) Netanyahu and the United States of America,” said another eyewitness, Ahmed Azzam, bitter that regional neighbours were not taking a tougher line against Israel.

MEDICS KILLED

In Rafah, in the southern Gaza Strip, the Gaza health ministry said four health workers were killed by an Israeli strike that hit ministry warehouses. Ambulance crews could not reach the dead or treat the wounded, it added.

In a statement, the Israeli military said forces, operating in Rafah since May, have killed dozens of militants in recent weeks and dismantled military infrastructure and tunnel shafts.

Israel’s demand to keep control of the southern border line between Rafah and Egypt has been a major sticking point in international efforts to conclude a ceasefire deal.

Hamas says it is focused on an agreement to end the war and get Israeli forces out of Gaza, while Israel says the war can only end once Hamas is eradicated. Another sticking point has been the specifics of an exchange of Israeli hostages for Palestinian prisoners held by Israel.

© Reuters. Palestinians inspect a school, which was sheltering displaced people, after it was hit by an Israeli strike, amid the Israel-Hamas conflict, in Gaza City, September 21, 2024. REUTERS/Dawoud Abu Alkas

This war in the decades-old Israeli-Palestinian conflict was triggered on Oct. 7 when Hamas attacked Israel, killing 1,200 people and taking about 250 hostages, according to Israeli tallies.

Israel’s subsequent assault on the enclave has killed more than 41,000 Palestinians, according to the local health ministry, and displaced nearly the entire 2.3 million-strong population.

(Reporting and writing by Nidal al-Mughrabi; Additional reporting by Dawoud Abu Alkas in Gaza, Adam Makary in Cairo and Ali Sawafta in Ramallah; Editing by Andrew Heavens and Andrew Cawthorne)

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Trump to visit North Carolina as scandal swirls around Republican ally

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By James Oliphant

(Reuters) – Republican presidential candidate Donald Trump will not be joined by his party’s embattled pick for North Carolina governor when he visits the critical electoral state on Saturday, the Trump campaign said.

Trump previously endorsed Mark Robinson, who was the subject of an explosive CNN report this week that he once called himself a Black Nazi and proposed bringing back slavery in comments posted on a pornography website. 

Robinson, the state’s lieutenant governor, denied the allegations and has said he will remain in the governor’s race. His campaign could not be reached for comment.

Some Republicans fear his candidacy in one of the country’s highest-profile down-ballot races this year could damage Trump’s chances in the battleground state, where polls show Trump essentially tied with Democratic rival Kamala Harris ahead of the Nov. 5 election.

Ahead of Trump’s afternoon rally in Wilmington, North Carolina on Saturday, the Democratic National Committee launched new advertising across the cities of Raleigh, Charlotte and Greensboro tying the former president to Robinson. 

The billboard ads show a photo of the two men together, along with direct quotes from Trump previously calling Robinson an “outstanding person” and an “incredible gentleman.” 

The Harris campaign also began running a TV ad in the state on Friday featuring Trump’s past praise for Robinson.  

In March, Trump called Robinson “Martin Luther King on steroids” after Robinson delivered remarks in Greensboro, and Robinson appeared at a Trump event as recently as last month. Robinson would be the state’s first Black governor if elected.  

Robinson has a history of inflammatory rhetoric, at times referring to Muslims as “invaders” and calling gay and transgender people “filth.” He has made comments denying the Holocaust. 

Trump has yet to address the latest allegations against Robinson. One Trump adviser, who asked not to be named, said Trump should stay silent and not fan the controversy.

“Ignore it, and let it die,” the adviser said.

Trump’s campaign did not respond to a request for comment.

Harris’ campaign and its allies have made a significant investment in North Carolina, including two stops by the vice president last week. A Democratic presidential candidate has not won the state since 2008, but voters elected Democrat Roy Cooper as governor in 2016 and 2020. 

Robinson had been trailing his opponent, Democrat Josh Stein, even before the CNN report, suggesting that he could be a drag on Trump’s chances in the state if some disaffected Republicans stay home on Election Day or defect to Harris. 

Chris Cooper, a professor of political science at Western Carolina University, said in a state that Trump won by just 1.3 percentage points in 2020, the Robinson scandal could damage Republicans’ chances up and down the ballot in November, including Trump’s. 

“If some people feel that the Republican brand is stained enough that they’d rather stay home, then that’s going to matter,” Cooper said. “It doesn’t take a big difference to flip the state.”

© Reuters. A Secret Service officer stands next to bulletproof glass on a stand from which Republican presidential nominee and former U.S. President Donald Trump will hold his campaign rally in Wilmington, North Carolina, U.S., September 21, 2024.  REUTERS/Carlos Barria

Thom Tillis, a Republican U.S. senator from North Carolina, responded to the allegations against Robinson by telling voters on X that “we must focus on the races we can win,” citing the presidential contest but omitting the gubernatorial vote.

“If Harris takes NC, she takes the White House,” Tillis wrote. “We can’t let that happen.” 

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GM to begin laying off about 1,700 workers at Kansas plant, WARN notice shows

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(Reuters) – General Motors (NYSE:) will begin laying off 1,695 workers at its Fairfax Assembly plant in Kansas, the company said in a Worker Adjustment and Retraining Notification (WARN) notice earlier this week.

The first of two rounds of layoffs will begin Nov. 18 and will include the temporary layoff of 686 full-time workers and the termination of 250 temporary employees, Automotive News reported on Saturday citing a company filing to the state of Kansas.

Starting Jan. 12, 759 full-time workers will be temporarily laid off, the report added.

GM did not immediately respond to a Reuters request for comment on the details of the latest layoffs.

© Reuters. FILE PHOTO: The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, U.S., March 16, 2021. .  REUTERS/Rebecca Cook/File Photo

Earlier in May, GM had said that it would pause production of the Cadillac XT4 after January 2025 in Kansas, resulting in layoffs of production employees until production resumes in late 2025 for both the Bolt EV and XT4 on the same assembly line.

The company had also said in August that it was laying off more than 1,000 salaried employees at its software and service units worldwide.

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