The number of US workers filing new applications for unemployment benefits fell less than expected last week, while consumer prices were unchanged in February on lower energy prices.
The data released today pointed to a gradual improvement in the labour market and generally muted inflation pressures, which should allow the Federal Reserve to honor its commitment to keep its benchmark interest rate ultra low for a while.
Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 457,000 in the week ended March 13th, the Labor Department said. Analysts had expected claims to slip to 455,000.
The data covered the survey period for the government's closely watched employment report for March, which will be released April 2nd.
In another report, the department said the Consumer Price Index was flat after rising 0.2 per cent in January. Excluding volatile energy and food prices, the closely watched core measure of consumer inflation inched up 0.1 per cent after falling 0.1 per cent in January.
Compared to February last year, prices rose 2.1 per cent.
US stock index futures were little changed after the data, while US Treasury debt prices rallied. The US dollar fell against the yen and euro.
A government report yesterday showed muted inflation pressures at the wholesale level. The US central bank this week renewed a promise to keep its benchmark interest rate exceptionally low for an extended period, citing a moderate economic recovery and low rates of resource utilisation.
The four-week moving average of new claims, which irons out week-to-week volatility, fell 4,250 to 471,250, the department said.
Both initial claims and the four-week average have been stuck at elevated levels after falling rapidly in the second half of last year, an indication that any improvement in the labor market will only be gradual.
Analysts argue that both have to fall below 450,000 to signal sustainable private payrolls growth.
However, they still expect the economy to show job growth in March, led by temporary hiring for the 2010 census. About 8.4 million jobs have been lost since the start of the recession in December 2007.
With the labour market still weak, inflation pressures will likely remain muted.
Last month, energy costs fell 0.5 per cent, the biggest drop since April, after surging 2.8 per cent in January, the department said. Gasoline prices declined 1.4 per cent, the largest fall since March, partially unwinding January's 4.4 per cent surge.
Food prices edged up 0.1 per cent in February after rising 0.2 per cent.
Core prices were bumped up last month by rising costs for vehicles and medical care. Medical care costs rose 0.8 per cent for the second straight month.
The gain in core prices was, however, limited by shelter costs, which were unchanged, as well as a 0.7 per cent drop in apparel. The decline in apparel prices was the biggest since October 2008.
Compared to February last year, the core inflation rate rose 1.3 per cent, slowing from a 1.6 per cent year-on-year increase in January. Analysts had expected core prices to rise 1.4 per cent year-on-year.
Reuters