US jobless and prices rise faster
Source: Agencies |
August 19, 2011, Friday
|
Print Edition
Print Edition
THE number of Americans claiming new jobless benefits rose last week and consumer prices increased at the fastest pace in four months in July, highlighting the challenges facing the US Federal Reserve.
Initial claims for state unemployment benefits increased by 9,000 to a seasonally adjusted 408,000, the US Labor Department said yesterday, above economists' expectations of a rise to 400,000.
Another report from the Labor Department showed the Consumer Price Index increased 0.5 percent in July, the largest gain since March, after falling 0.2 percent in June. That was above economists' expectations of a 0.2 percent gain.
Petrol, the price of which rose 4.7 percent after falling 6.8 percent the previous month, accounted for about half the rise in CPI.
But the core CPI - excluding food and energy - rose 0.2 percent after rising 0.3 percent in June.
"There is a little bit of price pressure. It complicates things for the Fed and adds a degree of challenge," said Paul Ballew, chief economist at Nationwide Insurance.
The benefit claims data covers the survey week for August non-farm payrolls. Claims dropped by 14,000 between July and August, but there are fears that turbulence in financial markets may have slowed hiring this month.
Avery Shenfeld, economist at CIBC World Markets, said: "Initial claims were a bit higher than expected, ticking up marginally to 408,000, indicating a generally sluggish trend for hiring, although still better than where we stood during the second quarter."
The Fed last week promised to keep interest rates near zero at least until mid-2013 to boost growth, and said the outlook for inflation over the medium-term was subdued.
Given limited pricing power for producers as consumers grapple with a 9.1 percent unemployment rate, inflation is not regarded as a threat now for an economy that barely grew in the first half of the year.
Fears of a second recession, the loss of the nation's AAA credit rating and the sovereign debt crisis in Europe have inflicted damage on global stock markets. That has hurt consumer confidence and may make businesses more reluctant to hire.
Initial claims for state unemployment benefits increased by 9,000 to a seasonally adjusted 408,000, the US Labor Department said yesterday, above economists' expectations of a rise to 400,000.
Another report from the Labor Department showed the Consumer Price Index increased 0.5 percent in July, the largest gain since March, after falling 0.2 percent in June. That was above economists' expectations of a 0.2 percent gain.
Petrol, the price of which rose 4.7 percent after falling 6.8 percent the previous month, accounted for about half the rise in CPI.
But the core CPI - excluding food and energy - rose 0.2 percent after rising 0.3 percent in June.
"There is a little bit of price pressure. It complicates things for the Fed and adds a degree of challenge," said Paul Ballew, chief economist at Nationwide Insurance.
The benefit claims data covers the survey week for August non-farm payrolls. Claims dropped by 14,000 between July and August, but there are fears that turbulence in financial markets may have slowed hiring this month.
Avery Shenfeld, economist at CIBC World Markets, said: "Initial claims were a bit higher than expected, ticking up marginally to 408,000, indicating a generally sluggish trend for hiring, although still better than where we stood during the second quarter."
The Fed last week promised to keep interest rates near zero at least until mid-2013 to boost growth, and said the outlook for inflation over the medium-term was subdued.
Given limited pricing power for producers as consumers grapple with a 9.1 percent unemployment rate, inflation is not regarded as a threat now for an economy that barely grew in the first half of the year.
Fears of a second recession, the loss of the nation's AAA credit rating and the sovereign debt crisis in Europe have inflicted damage on global stock markets. That has hurt consumer confidence and may make businesses more reluctant to hire.
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