The amount of Americans filing for unemployment benefits dropped close to six-month lows last week, directing to a further firming labor market that could encourage the Fed’s plan to start trimming its

A weakening automobile sector is, however, adding a dent to an otherwise optimistic economic outlook. On Thursday additional data on showed manufacturing output dropped last month as motor vehicle production declined. Auto manufacturers are reducing production among feeble sales that have created an inventory surplus.

“Today’s data were constructive towards our expectation of another robust rise in real GDP growth in the third quarter and further labor market improvement,” stated Dana Peterson, an economist at Citigroup. “The readings support our conjecture that low inflation notwithstanding, the conditions for the Fed to announce balance sheet unwind are ripe.”
Initial claims for state unemployment benefits declined 12,000 to a seasonally revised 232,000 for the week ended Aug. 12, the Labor Department reported. That was the lowest level since the week ended Feb. 25 when claims declined to 227,000, which was the best reading since March 1973.

Claims have now been under 300,000, a threshold connected with a strong labor market, for 128 weeks. That is the longest stretch since 1970, when the labor market was smaller. The unemployment rate is 4.3 percent.

The four-week moving average of claims, considered a better gauge of labor market trends as it flattens out week-to-week volatility, dropped 500 to 240,500 last week.
Fears about persistently low inflation could, however, entice the U.S. central bank to stall hiking interest rates until December. Minutes of the Fed’s July 25-26 policy meeting published on Wednesday reported policymakers appeared increasingly worried about weak inflation, with some action against further rate hikes. The Fed has hiked borrowing costs twice this year.

The dollar .DXY was stable against a basket of currencies in midday trading, while prices of U.S. Treasuries gained moderately. U.S. stocks dropped as investors worried about President Donald Trump’s ability to pursue his pro-growth economic policies.
Trump on Wednesday fired two high-profile business advisory councils following a number of chief executives quit in protest over his remarks blaming violence in Virginia last weekend on anti-racism activists as well as white nationalists.