US claims plunge to lowest since late 2007; prices dormant
The number of Americans filing new claims for unemployment benefits fell to a near six-year low last week, hinting at a pick-up in job growth in early August. In a separate release, U.S. consumer prices remained largely benign in July, which could comfort Federal Reserve officials worried about low inflation as they weigh trimming their massive bond buying program.
Initial claims for state unemployment benefits dropped 15,000 to a seasonally adjusted 320,000, the lowest level since October 2007, the Labor Department said on Thursday.
Claims for the prior week were revised to show 2,000 more applications received than previously reported. Economists polled by Reuters had expected first-time applications to come in at 335,000 last week.
A Labor Department analyst said no states had been estimated and there was nothing unusual in the state-level data. He said there was less volatility in the data linked to automobile plant shutdowns that had plagued claims in July.
The four-week moving average for new claims, which irons out week-to-week volatility, fell 4,000 to 332,000, the lowest level since November 2007.
The drop in both new applications and the four-week average offered hope of an improvement in labor market conditions after hiring slowed a bit in July.
The job market is being closely monitored for clues when the Federal Reserve might make an announcement on the future of its monthly $85 billion in bond purchases that it is making to keep borrowing costs low.
The U.S. central bank has said it plans to start scaling back on the program this year.
The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid declined 54,000 to 2.97 million in the week ended Aug 3.
Inflation a non-factor
Separately, the Labor Department said on Thursday its Consumer Price Index rose 0.2 percent as the cost of goods and services ranging from tobacco to apparel and food increased. The CPI had increased 0.5 percent in June.
July's increase in consumer inflation was in line with economists' expectations.
In the 12 months through July, the CPI advanced 2.0 percent, the largest increase since February, after increasing 1.8 percent in June.
The push in inflation to the Fed's 2 percent target could offer some comfort to some central bank officials who have warned on the potential dangers of inflation running too low.
Stripping out energy and food, consumer prices rose 0.2 percent for a third straight month.
That took the increase over the past 12 months to 1.7 percent. The core CPI had gained 1.6 percent in June.
The uptick in prices fits in with Fed Chairman Ben Bernanke's views that the low inflation was temporary.
The U.S. central bank has said it plans to start trimming the $85 billion in bonds it is purchasing each month to keep borrowing costs low later this year.
Most economists anticipate the Fed will make an announcement in September on the future of the bond purchasing program.
In July, prices for new motor vehicles, apparel, tobacco, medical care and shelter increased