Mixed Picture: Jobless Claims Fall, Imports Drop
The number of Americans filing new claims for jobless benefits fell last week, nearing its lowest level in five years in a sign of resilience for the U.S. labor market. But an unexpected fall in U.S. imports and exports prices pointed to signs of cooler economic growth.
Initial claims for state unemployment benefits declined 12,000 to a seasonally adjusted 334,000, the Labor Department said on Thursday.
That was the smallest number of first-time applications since early May and near levels last seen the early days of the 2007-09 recession.
Many economists believe growing confidence in America's economic recovery has led U.S. employers to exit a long cycle of elevated layoffs. Moreover, it has been difficult to discern any increase in layoffs due to Washington's embrace of harsher fiscal austerity this year.
At the same time, firms have been shy to step up the pace of hiring and the country's unemployment rate is expected to end this year above 7 percent.
The jobless claims reading beat the expectations of economists polled by Reuters, who had expected a decline of 1,000. The four-week moving average for new claims, which irons out week-to-week volatility, dropped 7,250 to 345,250.
A Labor Department analyst said no states had been estimated and there was nothing unusual in the state-level data.
The labor market is being closely watched for clues to when the Federal Reserve might start scaling back its expansive monetary stimulus.
Fed Chairman Ben Bernanke said last month a decision to start tapering the $85 billion in bonds the U.S. central bank is buying each month could come at one of its "next few meetings" if the economy appeared set to maintain momentum.
The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid rose 2,000 to 2.97 million in the week ended June 1.
Signs of Cooler Growth
Prices for U.S. imports and exports fell unexpectedly in May, a sign of cooler economic growth worldwide that could hurt American factories but likely gave some respite to consumers.
Import prices slipped 0.6 percent last month, the third consecutive decline, the Labor Department said on Thursday.
Economists polled by Reuters had expected prices to be unchanged last month.
A drop in oil prices contributed to much of the decline. Stripping out petroleum, import prices dipped a more modest 0.3 percent.
That is both good and bad news for the U.S. economy. On the one hand, falling fuels costs give consumers more money to spend on other things, and mean less hardship for struggling households.
But the reason for the decline in fuel prices during May was probably tied to a global economic chill caused by Europe's debt crisis, which has slammed economies on the continent and even hurt economic output in China.
Falling global demand also hurts American companies, who sell everything from industrial machines to architectural services on the global market.
U.S. export prices fell 0.5 percent in May, also marking the third straight month of declines. Economists polled by Reuters had expected export prices to be flat during the month.
At the same time, oil prices have turned higher in June, helped by signs of stronger job growth in the United States.