The number of Americans filing for unemployment benefits unexpectedly rose last week, but remained below levels associated with a healthy labour market.
Other data yesterday showed import prices tumbled in December for a sixth straight month as the cost of petroleum and a range of other goods fell further, suggesting a tame inflation environment could persist in the near term.
Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 284,000 for the week ended January 9, the Labour Department said. Still, it was the 45th consecutive week that claims remained below the 300,000 mark, which is associated with strong labour market conditions. That is the longest such stretch since the early 1970s.
Economists had forecast claims slipping to 275,000 last week. The increase likely reflects volatility rather than a change in labour market conditions, as the data is difficult to adjust during holidays. Claims also tend to increase at the start of each quarter.
The four-week moving average of claims, considered a better measure of labour market trends as it strips out week-to-week volatility, rose 3,000 to 278,750 last week.
US stock index futures were trading higher after the data, while the dollar was slightly weaker against a basket of currencies. Prices for US Treasury debt fell.
The labour market has largely shrugged off weakness in the economy, with nonfarm payrolls surging in December. Economic growth has been hit by a strong dollar, slowing global demand, efforts by businesses to slim an inventory bloat, and spending cuts by energy companies.
In another report, the Labour Department said import prices decreased 1.2% last month after dropping 0.5% in November. Import prices have now declined in 16 of the last 18 months, a sign they will continue to weigh on consumer goods prices. For all of 2015, import prices fell 8.2%, the largest calendar-year decrease since 2008.
The strong dollar and a sharp drop in oil prices are keeping imported inflation subdued, leaving overall inflation well below the Federal Reserve’s 2% target.
With the dollar continuing to rise against major currencies and oil prices hovering at 12-year lows, inflation will probably remain benign for a while.
Economists say weak inflation together with slowing domestic and global growth could make the Fed cautious about increasing interest rates at its March policy meeting, despite tightening labour market conditions.
The US central bank last month raised its benchmark overnight interest rate by a quarter of a percentage point to between 0.25% and 0.50%, the first rate hike in nearly a decade.
In November, imported petroleum prices plunged 10% after sliding 3.6% in November. Excluding petroleum, import prices slipped 0.4% after falling 0.3% in November.
The dollar’s 21.7% appreciation against the currencies of the US’ main trading partners over the last 20 months has made imported goods cheaper. Prices for industrial supplies excluding petroleum fell 1.4%, while the cost of imported capital goods slipped 0.3%.
The report also showed export prices dropping 1.1% last month after sliding 0.7% in November. Export prices fell 6.5% in 2015, the largest calendar-year drop since the index was first published in 1983.
A recruiter (left) speaks with a job seeker during a job fair in Detroit. Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 284,000 for the week ended January 9, the Labour Department said yesterday.
