Data shows US labor market is strengthening
Print Edition
The number of Americans filing applications for unemployment benefits dropped to a 49-and-a-half-year low last week, pointing to sustained labor market strength that could temper expectations of a sharp slowdown in economic growth.
Other data yesterday showed producer prices increased by the most in five months in March amid a surge in the cost of gasoline. But underlying producer prices remained soft, the latest indication of tame inflationary pressures that strengthen the Federal Reserve’s decision to suspend further interest rate increases this year despite tight labor market conditions.
Initial claims for state unemployment benefits fell 8,000 to a seasonally adjusted 196,000 for the week ended April 6, the lowest level since early October 1969, the Labor Department said. Claims have now declined for four straight weeks.
Economists polled by Reuters had forecast claims would rise to 211,000 in the latest week. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 7,000 to 207,000 last week, the lowest level since early December 1969.
The labor market is the main pillar of support for the economy, which appears to have lost momentum in the first quarter as the stimulus from a US$1.5 trillion tax cut package fades and a trade war between China and the United States and softening global demand hurt exports.
Nonfarm payrolls increased by 196,000 jobs in March, well above the roughly 100,000 needed per month to keep up with growth in the working-age population. The unemployment rate is at 3.8 percent, close to the 3.7 percent Federal Reserve officials project it will be by the end of the year.
US stock index futures pared gains slightly after the data while Treasury yields rose. The US dollar gained against a basket of currencies.
In a second report yesterday, the Labor Department said its producer price index for final demand rose 0.6 percent in March, the largest increase since last October. The PPI edged up 0.1 percent in February.
In the 12 months through March, the PPI rose 2.2 percent after advancing 1.9 percent in the 12 months through February. Economists polled by Reuters had forecast the PPI would climb 0.3 percent in March and increase 1.9 percent on a year-on-year basis.
A key gauge of underlying producer price pressures that excludes food, energy and trade services was unchanged last month after ticking up 0.1 percent in February. The so-called core PPI increased 2.0 percent in the 12 months through March. That was the smallest annual increase since August 2017 and followed a 2.3 percent rise in February.
Data on Wednesday showed consumer prices rose by the most in 14 months in March, driven by more expensive gasoline.
But core inflation remained muted amid a plunge in the cost of apparel.
Slowing domestic and global growth are keeping inflation contained. Wage inflation has also been moderate despite a tight labor market.
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