The Economy

Jobless Claims Still Show Strong Labor Market

While the jobs market stabilizes, import prices decline for the sixth straight month.
Matthew HellerJanuary 15, 2016
Jobless Claims Still Show Strong Labor Market

New data show an unexpected increase last week in the number of Americans filing for unemployment benefits but claims were still short of indicating any weakening in the labor market.

The U.S. Labor Department on Thursday said initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 284,000 for the week ended Jan. 9. Economists had forecast claims slipping to 275,000.

But claims have now been below the 300,000 mark, which is associated with strong labor market conditions, for 45 straight weeks, the longest such stretch since the early 1970s.

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“Claims are still low from a historical perspective, and we see little evidence in this morning’s report to suggest anything other than healthy labor market separations,” Jesse Hurwitz, an economist at Barclays in New York, told Reuters.

Claims also tend to increase at the start of each quarter. The four-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, rose 3,000 to 278,750 last week.

“The labor market has largely shrugged off weakness in the economy, with nonfarm payrolls surging in December,” Reuters said.

In another report, the Labor Department said import prices decreased 1.2% last month after dropping 0.5% in November. Import prices, which have been weighed down by lower oil prices and a strong dollar, have now declined for six straight months, pointing to tame consumer prices that could keep inflation this year below the Federal Reserve’s 2% target.

“Import prices should continue to exert a drag on domestic inflation in the first half of 2016. The incoming data continue to provide uncertainty over the likelihood of a rate hike in March,” said Sam Bullard, a senior economist at Wells Fargo Securities.

For all of 2015, import prices fell 8.2%, the largest calendar-year decrease since 2008. “With the dollar continuing to rise and oil prices hovering at 12-year lows, consumer inflation will probably remain benign this year,” Reuters predicted.