US weekly jobless claims rise; monthly producer price gains slow

THE number of Americans filing new claims for unemployment benefits unexpectedly rose last week, but there is no material shift in labour market conditions, with demand for workers strong and shortages rampant.

Initial claims for state unemployment benefits increased 1,000 to a seasonally adjusted 203,000 for the week ended May 7, the highest since February, the Labor Department said on Thursday (May 12). Economists polled by Reuters had forecast 195,000 applications for the latest week.

Claims have been largely treading water since hitting a more than 53-year low of 166,000 in March. Economists blamed the second straight weekly increase on volatility in the data around moving holidays like Easter, Passover and school spring breaks.

There were a record 11.5 million job openings on the last day of March, and nonfarm payrolls rose 428,000 in April, the 12th straight month of employment gains in excess of 400,000. Claims have dropped from an all-time high of 6.137 million in early April 2020.

The Fed last week raised its policy interest rate by half a percentage point, the biggest hike in 22 years, and said it would begin trimming its bond holdings next month. The US central bank, which started raising rates in March, is hoping to bring the demand and supply of labour back in alignment.

Tight labour market conditions are boosting wages, helping to keep inflation unbearably high. But there are signs inflation has probably peaked, at least when measured on an annual basis.

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In another report on Thursday, the Labor Department said the producer price index (PPI) for final demand rose 0.5 per cent in April as gains in the cost of energy products moderated. The PPI surged 1.6 per cent in March. In the 12 months to April, the PPI increased 11.0 per cent after accelerating 11.5 per cent in March.

Economists had forecast the PPI gaining 0.5 per cent for the month and increasing 10.7 per cent year-on-year.

The slowdown in monthly producer price gains follows a similar trend in consumer prices last month. The government reported on Wednesday that consumer prices logged their smallest rise in 8 months in April. The annual increase in consumer prices also slowed for the first time since last August. REUTERS