Jobless claims up, trend favors strong labor market
WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits rose more than expected last week, but the increase did little to change views that the labor market was strengthening.
Initial claims for state unemployment benefits increased 21,000 to a seasonally adjusted 311,000 for the week ended Aug. 9, the Labor Department said on Thursday.
Economists, who had expected a rise to only 295,000, shrugged off the rise. Claims are settling down after volatility in July related to annual automobile plant shutdowns had at one point pushed new filings to their lowest level since 2006.
"Today's report continues to signal a solid labor market that is experiencing a very low pace of layoffs," said Omair Sharif, senior economist at RBS in Stamford, Connecticut.
The four-week average of claims, a better measure of labor market trends as it irons out week-to-week volatility, rose 2,000 last week to 295,750. However, claims at that level are consistent with solid job gains.
A significant decline in layoffs, which has pushed claims down to their pre-recession levels, has been the major driver of an improving job market. But other parts of the labor market puzzle are also falling into place.
A report on Tuesday showed hiring rose in June to its highest level since February 2008. The number of job openings that month was the highest since February 2001.
The strengthening labor market picture has some economists betting on an early interest rate hike from the Federal Reserve.
The U.S. central bank has kept its benchmark interest rate near zero since December 2008 and has shown little sign of being in a hurry to start tightening monetary policy.
Fed Chair Janet Yellen argues that there is still slack in the labor market, citing tepid wage growth and a large number of long-term unemployed Americans and those working part-time.
The economy has rebounded from its winter slump, growing at a 4.0 percent annual rate in the second quarter.
While strong growth is expected in the third quarter, the pace has likely slowed a bit with data on Wednesday showing a surprise weakness in retail sales, a sign that stagnant incomes remain a constraint.
On Thursday, retail giant Walmart Stores Inc reported flat U.S. same-store sales for the second quarter and cut its full-year profit forecast. Department store operator Kohl's Corp said its quarterly same-store sales fell 1.3 percent.
The jobless claims report showed the number of people still receiving benefits after an initial week of aid increased 25,000 to 2.54 million in the week ended Aug. 2. The unemployment rate for people receiving jobless benefits was 1.9 percent for the fifth successive week.
"The continuing claims data point to a tightening in the labor market as measured by the short-term unemployment rate," said John Ryding, chief economist at RDQ Economics in New York.
"The August jobs report will be very solid, which will bring the Fed one step closer, in our opinion, to shifting guidance about the timing of the first rate hike, which we continue to believe will be March 2015."
In a second report, the Labor Department said import prices decreased 0.2 percent last month as a decline in the cost of petroleum offset a rebound in food prices.
Import prices had gained 0.1 percent in June. In the 12 months through July, import prices increased 0.8 percent. Imported inflation was also dampened by weak automobiles prices, which recorded their largest drop since December 1992.
(Reporting By Lucia Mutikani; Editing by Andrea Ricci)