Labor market firming, jobless claims fall
Dollar's strength, cheap oil dampen inflation pressures
The number of Americans filing for unemployment benefits fell last week, pointing to sustained labor market strength in early August that could help spur faster economic growth.
Other data on Thursday showed an unexpected rise in import prices in July as a drop in petroleum prices was offset by gains in the cost of other goods. However, renewed dollar strength is expected to curb underlying inflation in the coming months.
“The data remain consistent with a still-strong trend in employment growth, which means the backdrop for consumer spending remains favorable,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.
Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 266,000 for the week ended Aug. 6, the Labor Department said. Claims for the prior week were revised to show 2,000 fewer applications received than previously reported.
Claims have been below 300,000, a threshold associated with a strong labor market, for 75 straight weeks, the longest streak since 1973 when the labor force was smaller.
The four-week average of claims, considered to be a better measure of labor market trends as it irons out week-to-week volatility, rose 3,000 to 262,750 last week.
With the labor market perceived to be either at or approaching full employment, there is probably little room for further declines in claims. A report on Wednesday showed layoffs fell to a near two-year low in June.
In a separate report, the Labor Department said import prices edged up 0.1 percent last month after increasing 0.6 percent in June. Economists polled by Reuters had forecast import prices falling 0.3 percent in July.
The combination of dollar strength and cheap oil will likely continue to dampen imported inflation pressures and keep overall inflation below the Federal Reserve’s 2 percent target.