US weekly unemployment claims rise; import prices push higher

WASHINGTON: The number of Americans filing for unemployment benefits rose less than expected last week, pointing to a tightening labour market that is starting to spur faster wage growth.
Other data showed import prices posting their largest gain in nearly five years in the 12 months through December, suggesting that inflation could soon push higher. Import prices are being driven by rising oil prices, but a strong dollar could limit some of the impact on inflation. Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 247,000 for the week ended on January 7, the Labor Department said. It was the 97th straight week that jobless claims remained below 300,000, a threshold associated with a healthy labour market. That is the longest stretch since 1970, when the labour market was much smaller.
“Jobless claims remain in a very constructive range and are still evidence of an environment in which turnover is low and employers are generally content to maintain and expand their payrolls,” said Jim Baird, chief investment officer at Plante Moran Financial Advisers in Kalamazoo, Michigan.
Economists had forecast first-time applications for jobless benefits rising to 255,000 in the latest week.
Jobless claims data tends to be volatile around the holiday season. The four-week moving average, considered a better measure of labour market trends as it irons out week-to-week volatility, fell 1,750 to 256,500 last week. The number of Americans still receiving jobless benefits after an initial week of aid fell 29,000 to 2.09 million in the week ended on December 31. That was the first decline in the so-called continuing claims since November.
US financial markets were little moved by the data amid disappointment over the lack of details regarding president-elect Donald Trump’s economic policy on Wednesday during his first press conference since his November 8 election victory.
Stocks on Wall Street were trading lower, while prices for US government debt rose. The dollar fell against a basket of currencies also as minutes from the European Central Bank’s last meeting revealed a few policymakers had not backed an extension of the ECB’s bond buying programme.
During his election campaign Trump pledged to cut taxes, increase spending on infrastructure and relax regulations. While he has offered few details on these election promises, economists are hoping that the proposed fiscal stimulus would boost economic growth this year.
The stimulus would come against the backdrop of a labour market that is at or near full employment, with the unemployment rate near a nine-year low of 4.7 per cent. With tightening labour market conditions starting to push up wage growth, that could stoke inflation pressures and prompt the Federal Reserve to raise interest rates at a faster pace than currently envisaged.
The Fed raised its benchmark overnight interest rate last month by 25 basis points to a range of 0.50 per cent to 0.75 per cent. The US central bank has forecast three rate hikes for this year. Average hourly earnings increased 2.9 per cent in the 12 months through December, the largest gain since June 2009. — Reuters