WASHINGTON: The number of Americans filing applications for unemployment benefits increased more than expected last week, suggesting the labor market was slowing, but probably not to the extent implied by a near-stall in job growth in February.
While other data on Thursday showed import prices rising by the most in nine months in February, the trend in imported inflation remained weak.
Import prices dropped on a year-on-year basis for a third straight month in February. The stream of data remains broadly supportive of the Federal Reserve’s pledge to be “patient” before raising interest rates further this year.
“Right now the labor market looks distinctly cooler than it did last year,” said Chris Rupkey, chief economist at MUFG in New York. “If Fed Chair (Jerome) Powell is waiting for inflation to pick up before resuming that gradual pace of rate hikes, today’s (import prices) report isn’t going to impress him much.”
Initial claims for state unemployment benefits rose 6,000 to a seasonally adjusted 229,000 for the week ended March 9, the Labor Department said on Thursday. Data for the prior week was unrevised. The Labor Department said no states were estimated.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, slipped 2,500 to 223,750 last week.
The labor market is slowing as workers become more scarce. Hiring is also being constrained by a weakening economy as stimulus from a $1.5 trillion tax cut diminishes. Washington’s trade war with Beijing, slowing demand overseas and uncertainty over Britain’s exit from the European Union are also hurting economic activity.
The government reported last week that nonfarm payrolls increased by only 20,000 jobs in February, the weakest since September 2017, in part as payback after hefty gains in the prior two months.
But the unemployment rate dropped two-tenths of a percentage point to 3.8 percent and annual wage growth was the strongest since 2009.
U.S. financial markets were little moved by the data on Thursday.—Reuters