WASHINGTON, Nov 16 (Reuters) – The number of Americans filing new claims for unemployment benefits rose to a three-month high last week, suggesting labor market conditions continue to ease. This could help the Federal Reserve combat inflation.
The Labor Department’s weekly jobless claims report released Thursday was the most timely data on the health of the economy and also showed that the number of unemployed people has widened to levels seen two years ago. Rising interest rates have suppressed demand, and the labor market has cooled, coinciding with a slowdown in economic activity.
This week, additional indicators of subdued inflation and subdued consumer spending raised hopes that the Fed’s monetary policy tightening cycle is complete.
Nancy Vanden Houten, chief US economist at the University of Oxford, said: “The Fed is certainly encouraged by the recent inflation numbers, but it will take a long time to convince them that inflation is on a sustainable trajectory back to 2%.” “We need to assess further slowdown in the labor market and growth in wages.” New York Economics.
First-time claims for state unemployment benefits rose by 13,000 for the week ending Nov. 11, to a seasonally adjusted 231,000, the highest level since August. Economists polled by Reuters had predicted 220,000 insurance claims in the past week.
Unadjusted claims increased by 1,713 to 215,874 last week. Applications surged in Massachusetts and New York, more than offsetting notable declines in Oregon and Georgia.
The increase in applications coincides with a recent slowdown in hiring. Job growth slowed in October, with the unemployment rate rising to 3.9%, the highest level since January 2022. The situation remains quite dire, with 1.5 job openings per unemployed person in September.
Economists at Goldman Sachs said they don’t think last month’s rise in unemployment is a bad omen, saying that the rise in the unemployment rate since April is due solely to an expansion in the labor force, not a decline in the workforce. It pointed out. employment.
The dollar fell against a basket of currencies. US bond prices rose.
Financial markets are even predicting a rate cut next May, according to CME Group’s FedWatch tool. Starting in March 2022, the Federal Reserve will raise interest rates by 525 basis points, to the current range of 5.25% to 5.50%.
Increase in unemployment
The number of people receiving benefits after the first week of employment proxy aid rose by 32,000 to 1.865 million in the week ending November 4, according to the claims report. This was the highest level since November 2021. So-called recurring claims have been increasing since mid-September.
Most economists attribute the rise to the difficulty of adjusting the data for seasonal fluctuations, rather than any significant changes in the labor market. They hope the issue will be resolved when the government updates its data next spring.
“There is no reason to expect the unemployment rate to rise significantly in November’s monthly jobs report,” said Lou Crandall, chief economist at Wrightson ICAP in New York.
While some agreed that seasonal adjustments were a problem, others said the sustained increase meant more people were unemployed and were unemployed for longer periods of time.
A separate report released by the Department of Labor’s Bureau of Labor Statistics on Thursday confirmed the inflation outlook, showing import prices fell by the most in seven months as prices fell sharply. It was done.
Import prices fell by 0.8% last month after rising by 0.4% in September. Economists had expected import prices excluding tariffs to fall by 0.3%. In the 12 months to October, import prices fell 2.0% after falling 1.5% in September. Annual import prices fell for nine consecutive months.
Imported fuel prices fell 6.3%, reversing the rise seen in September. Imported food prices fell by 0.6%, following a 0.4% drop in September. Import prices, excluding fuel and food, fell 0.2% after falling 0.1% in September. These so-called core import prices fell by 1.3% in September compared to the same month last year.
The dollar has strengthened against the currencies of the United States’ major trading partners this year, helping to curb import inflation pressures.
Imported capital goods prices fell by 0.2% from the previous month’s flat rate. However, prices for cars, parts and engines rose 0.3%, following a 0.1% rise in September.
Consumer goods excluding automobiles fell 0.1% after being flat in September. Rising borrowing costs are dampening domestic demand.
Prices of imported goods from China were flat after falling 0.1% in September. In October, sales decreased by 2.8% compared to the same month last year, the largest drop since October 2009.
The report also showed that export prices fell by 1.1% in October as both agricultural and non-agricultural export prices fell. Export prices rose 0.5% in September. Compared to the same month last year, prices fell by 4.3% in September and 4.9% in October.
Report by Lucia Mutikani.Editing: Andrea Ricci
Our standards: Thomson Reuters Trust Principles.