WASHINGTON: The number of Americans filing applications for unemployment benefits increased more than expected last week, suggesting the labour 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.
News on the housing market remained downbeat, with new home sales dropping more than expected in January. The stream of data remains broadly supportive of the Federal Reserve’s pledge to be “patient” before raising interest rates further this year.
“If the Fed is reading the tea leaves the economic brew of data are distinctly on the weak side today, and will keep Fed policy cemented in place at next week’s meeting,” said Chris Rupkey, chief economist at MUFG in New York. Fed officials are scheduled to meet next Tuesday and Wednesday to decide on monetary policy.
Initial claims for state unemployment benefits rose 6,000 to a seasonally adjusted 229,000 for the week ended March 9, the Labour Department said on Thursday. Data for the prior week was unrevised. The Labour Department said no states were estimated.
Economists polled by Reuters had forecast claims rising to 225,000 in the latest week. Claims have been hovering in the middle of their 200,000-253,000 range this year.
The labour 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 per cent and annual wage growth was the strongest since 2009..
Separately on Thursday, the Commerce Department said new home sales declined 6.9 per cent to a seasonally adjusted annual rate of 607,000 units in January. December’s sales pace was revised higher to 652,000 units from the previously reported 621,000 units.
Economists had forecast new home sales, which account for about 11 per cent of housing market sales, slipping 0.6 per cent to a pace of 620,000 units in January. Affordability remains a challenge, especially at the lower end of the market, even as mortgage rates have dropped from last year’s lofty levels and house price inflation has slowed.
Expensive lumber as well as land and labour shortages continue to constrain builders. Economists expect the housing market, which hit a soft patch last year, to remain sluggish through the first half of 2019.
Investment in homebuilding contracted 0.2 per cent in 2018, the weakest performance since 2010.
In third report on Thursday, the Labour Department said import prices rose 0.6 per cent last month, boosted by increases in the costs of fuels and consumer goods. That was the biggest gain since May and followed an upwardly revised 0.1 per cent rise in January.
Economists polled by Reuters had forecast import prices rising 0.3 per cent in February after a previously reported 0.5 per cent drop in January.
In the 12 months through February, import prices fell 1.3 per cent. That followed a 1.6 per cent decline in January. — Reuters
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