The number of Americans who are filing for unemployment benefits went up unexpectedly last week but were still within levels that are associated with a healthy labor market.
Other data showed that import prices fell in December for the sixth month running and were weighed down by a strong dollar and lower oil prices. The data also pointed to subdued consumer prices which could keep inflation below the 2% target set by the Federal Reserve.
Initial claims for unemployment benefits went up by 7000 to 284000 for the week ending on Jan 9th, according to the Labor Department. It was the forty-fifth week in a row during which claims stayed below the 300000 level associated with a strong labor market. This is its longest stretch since the early 70’s.
As per Jesse Hurwitz, an economist for Barclays in New York, claims are low historically and there is little evidence of anything other than a healthy labor market right now.
Economists forecasted claims falling to 275000 just last week. This increase most likely reflects volatility since the data isn’t adjusted properly around the holidays. Claims usually increase at the beginning of each quarter as well.
The four week moving average, which is supposed to be a better measure for trends in the labor market went up by 3000 to 278750 last week.
US financial markets didn’t move too much because of this data. Stocks traded higher during choppy trades and the US Treasury prices remained mixed. The dollar became slightly stronger against a number of other currencies.
The labor market has managed to shrug off weakness for the most part and nonfarm payrolls surged in December as well. Economic growth was hit by the strength of the dollar, tepid demand, efforts to slim inventory bloats and spending cuts of energy companies.
The 21.7% appreciation of the dollar against currencies of all the main trading partners of the United States in the last twenty months has made it cheaper to import goods. The report has also shown that export prices fell by 1.1% last month after falling 0.7% during November. Export prices fell by 6.5% in 2015 which is the largest drop for a calendar year since 1983.