Jobless claims rise, but labor recovery grinds on

By Jason Lange

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits rose last week, a potentially worrisome sign for the economy although the level still pointed to ongoing healing in the labor market.

Other data on Thursday showed prices for U.S. imports and exports fell in June for the fourth straight month, hit by cooler economic growth worldwide.

Initial claims for state unemployment benefits increased by 16,000 to a seasonally adjusted 360,000, the Labor Department said.

"It's a little bit worrisome," said Russell Price, senior economist at Ameriprise Financial Services Inc in Troy, Michigan.

Still, the reading was likely clouded by seasonal factors.

The Labor Department can have a tough time seasonally adjusting claims in early July because many factories shut down during that period for retooling, but the scheduling for the shutdowns varies from year to year. A Labor Department analyst said there was nothing otherwise unusual in the claims data.

Even with the increase, the number of layoffs remains in the range of levels seen over the last year, and is consistent with a continued drop in the unemployment rate.

"The labor market has been doing pretty well," said Joshua Dennerlein, economist at Bank of America Merrill Lynch in New York.

The U.S. labor market has shown signs of strength in recent weeks, with 195,000 jobs added to payrolls in June. This has cemented expectations the U.S. Federal Reserve will start winding down its massive stimulus program as early as September.

The four-week moving average of new claims, which smooths out some seasonal volatility, increased by a more modest 6,000 to 351,750. Economists polled by Reuters had expected first-time applications to fall to 340,000 last week.

Some investors took the data as a sign the Fed might delay plans to reduce its bond-buying program aimed at spurring more job growth. U.S. Treasuries prices extended gains briefly, while the dollar extended losses against the yen.

Minutes to the Fed's June meeting released on Wednesday showed about half of its policymakers felt the U.S. central bank's bond-buying stimulus should be brought to a halt by year end, but many wanted reassurance the U.S. jobs recovery was on solid ground before any policy retreat.

In a separate report, the Labor Department said export prices fell by 0.1 percent last month. That matched the median forecast of a Reuters poll.

The drop probably reflects weakness in global demand which has been hit by Europe's debt crisis and slowing growth in China.

Import prices slipped 0.2 percent last month, dragged down by another month of declining costs outside of the fuels category. Petroleum prices rose 0.2 percent.

Prices for both imports and exports have fallen every month since March, the longest such streak since 2008 when the world was mired in a financial crisis.

The drop in prices last month for imported cars and other consumer goods could help some U.S. consumers.

However, some economists are worried an environment of weak inflation could raise the specter of deflation, which entails a spiral of falling prices and wages that is difficult for central banks to fight.

Economists polled by Reuters had expected import prices to be unchanged last month.

(Reporting by Jason Lange in Washington; Additional reporting by Herb Lash and Richard Leong in New York; Editing by Andrea Ricci and Paul Simao)

Source: http://news.yahoo.com/jobless-claims-rise-labor-recovery-grinds-123215526.html

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