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US jobs market firming as weekly unemployment claims drop

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WASHINGTON: The number of Americans filing for unemployment benefits fell more than expected last week, pointing to shrinking labour market slack that could allow the Federal Reserve to raise interest rates again this year despite moderate inflation growth.


Inflation is unlikely to pick up any time soon as other data on Thursday showed import prices recorded their biggest drop in 15 months in May. The Fed on Wednesday raised interest rates for the second time this year, saying it expected economic activity to expand at a moderate pace and labour market conditions to strengthen somewhat further.


Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 237,000 for the week ended June 10, the Labour Department said on Thursday. Economists had forecast first-time applications for jobless benefits falling to 242,000 in the latest week.


Claims have now been below 300,000, a threshold associated with a healthy labour market, for 119 straight weeks. That is the longest such stretch since 1970, when the labour market was smaller. The labour market is near full employment, with the jobless rate at a 16-year low of 4.3 per cent.


While monthly job growth has slowed, record high job openings suggest that is likely because companies cannot find qualified workers. The number of people still receiving benefits after an initial week of aid increased 6,000 to 1.94 million in the week ended June 3. The so-called continuing claims have now been below 2 million for nine straight weeks, pointing to diminishing labour market slack. The dollar rose slightly on the data, while prices for US Treasuries fell. US stock index futures were trading lower.


In another report, the Labour Department said import prices declined 0.3 per cent last month as the cost of imported petroleum products tumbled. That was the biggest drop since February 2016 and followed a 0.2 per cent increase in April.


In the 12 months through May, import prices rose 2.1 per cent, the smallest gain since last December. Import prices rose 3.6 per cent year-on-year in April.


The slowdown in import prices suggests domestic inflation measures could remain soft for a while.


Data on Wednesday showed an unexpected drop in consumer prices in May, leading to the smallest year-on-year increase in the consumer price index in six months. The US central bank has acknowledged the recent retreat in price pressures, which has pushed inflation well below the Fed’s 2 per cent target. — Reuters


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