WASHINGTON, Nov 16 (Reuters) – The number of Americans filing new claims for jobless benefits rose to a three-month high last week, suggesting labor market conditions are continuing to ease, which could help the Federal Reserve in the fight against inflation.
Thursday’s weekly jobless claims report from the Labor Department, the most timely data on the health of the economy, also showed the jobless number expanding to levels last seen two years ago. The labor market is cooling as higher interest rates curb demand in line with slowing economic activity.
It added to this week’s data showing easing inflation and moderation in consumer spending to support expectations that the Fed’s tightening cycle is complete.
“The Fed is certainly encouraged by recent inflation data, but needs to see a further slowdown in the labor market and wage growth to be convinced that inflation is on a sustainable path back to 2%,” said Nancy Vanden Houten , a leading American economist at Oxford Economics in New York.
Initial claims for state jobless benefits rose 13,000 to a seasonally adjusted 231,000 for the week ended Nov. 11, the highest since August. Economists polled by Reuters had forecast 220,000 claims for the past week.
Unadjusted claims rose by 1,713 to 215,874 last week. There was a jump in filings in Massachusetts and New York, more than offsetting notable decreases in Oregon and Georgia.
The increase in claims is consistent with a recent slowdown in hiring. Job growth slowed in October and the unemployment rate rose to 3.9%, the highest level since January 2022. With 1.5 job openings for every unemployed person in September, conditions remain quite tough.
Economists at Goldman Sachs said they did not believe last month’s increase in unemployment was a bad omen, noting that the rise in the jobless rate since April came entirely from an expansion in the size of the labor force, not a decline in hiring.
The dollar fell against a basket of currencies. US government bond prices rose.
Financial markets are even expecting a rate cut next May, according to CME Group’s FedWatch tool. From March 2022, the Fed raised its key interest rate by 525 basis points to the current range of 5.25%-5.50%.
UNEMPLOYMENT ROLLS ARE EVOLVING
The number of people receiving benefits after an initial week of employment-replacement assistance rose by 32,000 to 1.865 million in the week ended Nov. 4, the highest level since November 2021, the claims report showed. So-called continuing claims have increased since mid-September.
Most economists attribute the rise to the difficulty of seasonally adjusting the data, rather than a fundamental shift in the labor market. They expect this to be ironed out when the government reviews the data next spring.
“This is no reason to expect a significantly higher unemployment rate in November’s monthly jobs report,” said Lou Crandall, chief economist at Wrightson ICAP in New York.
While some agreed that seasonality was a problem, they also saw the sustained increase as a sign that more unemployed people are experiencing longer periods of unemployment.
The inflation outlook was bolstered by a separate report from the Labor Department’s Bureau of Labor Statistics on Thursday showing import prices fell by the most in seven months in October amid a broad decline in commodity spending.
Import prices fell 0.8 percent last month after rising 0.4 percent in September. Economists had forecast import prices, which exclude tariffs, to fall 0.3%. In the 12 months to October, import prices fell 2.0% after falling 1.5% in September. Annual import prices have fallen for nine consecutive months.
Imported fuel prices fell 6.3%, reversing gains from September. The price of imported food fell 0.6% after falling 0.4% in September. Excluding fuel and food, import prices fell 0.2 percent after falling 0.1 percent in September. These so-called core import prices fell by 1.3% year-on-year in September.
The dollar has strengthened against the currencies of the United States’ main trading partners this year, helping to reduce imported inflationary pressures.
Prices of imported manufactured goods fell 0.2% after remaining unchanged in the previous month. But spending on motor vehicles, parts and engines rose 0.3 percent after rising 0.1 percent in September.
Consumer goods, excluding autos, fell 0.1 percent after being flat in September. Higher borrowing costs are cooling domestic demand.
Prices of goods imported from China were unchanged after falling 0.1% in September. They fell 2.8% year-on-year in October, the biggest drop since October 2009.
The report also showed that export prices fell 1.1 percent in October as prices for both agricultural and non-agricultural exports fell. Export prices rose 0.5% in September. They collapsed 4.9% year-on-year in October after falling 4.3% in September.
Reporting by Lucia Muticani; Editing by Andrea Ricci
Our standards: The Thomson Reuters Trust Principles.