The United States Department of Labor announced that the number of unemployment claims rose higher the week ending August 25, but signs still point to a robust labor market. The number of claims for state unemployment benefits went up 3,000 to a seasonally-adjusted 213,000.
For three straight weeks, the number of unemployment claims registered lower, but the 213,000 was still 1,000 less than original forecasts from a Reuters poll of economists. Nonetheless, the claims come at a time when the capital markets are bustling with the S&P 500 officially becoming the longest bull market in history and the Nasdaq Composite reaching a record high.
The markets were little changed following the release of the data–the Dow Jones Industrial Average was down over 60 points, while the S&P 500 was down a paltry two points and the Nasdaq was up just six points.
Consumer Confidence Rises
The Conference Board’s Consumer Confidence Index registered its highest reading in 18 years on Tuesday. The index rose to 133.4 in August–an increase from 127.9 in July and its highest reading since 135.8 in October 2000.
“Expectations, which had declined in June and July, bounced back in August and continue to suggest solid economic growth for the remainder of 2018,” said Lynn Franco, director of economic indicators at the Conference Board. “These historically high confidence levels should continue to support health consumer spending in the near term.”
Eyes on NAFTA Deal with Canada
The markets could get a boost prior to Labor Day Weekend by a looming NAFTA deal with Canada as the country’s Foreign Affairs Minister Chrystia Freeland said that ongoing talks with the U.S. remain “constructive” despite the threat of punitive tariffs on Canadian-made cars if Canada spurns the prospect of a new North American Free Trade Agreement come Friday. Freeland praised Mexico’s trade concessions on autos and labor rights on Tuesday as she rejoined NAFTA talks.
The trade deal struck with Mexico on Monday would effectively eliminate the NAFTA name and would now be called The United States-Mexico Trade agreement. The Trump administration was pushing for a revamp of the NAFTA agreement prior to December 1 when Mexico turns over its leadership to the incoming administration of President-elect Andrés Manuel López Obrador.
The bilateral U.S.-Mexico deal announced on Monday gives U.S. President Donald Trump the right to impose 25% tariffs on imports of Mexican-made passenger vehicles. If Trump proceeds with the tariffs, Mexican duty-free exports of cars and sport-utility vehicles to the U.S. would have a cap of 2.4 million vehicles per year.
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