U.S. Labor Market Firming, but Inflation Remains Benign

Unemployment Benefits
David Goldman/AP
By Lucia Mutikani

WASHINGTON -- The number of Americans filing new claims for jobless benefits fell sharply last week and a gauge of factory activity hit an eight-month high in early November, hinting at some strength in the economy.

Other data Thursday showed wholesale prices fell for a second straight month in October, the latest sign of a lack of inflation pressure which helps give the Federal Reserve leeway as it considers when to scale back its bond-buying stimulus.

"Claims and manufacturing activity remain supportive for continued moderate economic growth in the fourth quarter," said Sam Bullard, a senior economist at Wells Fargo Securities (WFC) in Charlotte, N.C.

Initial claims for state unemployment benefits fell 21,000 to a seasonally adjusted 323,000, the Labor Department said. Economists had forecast a drop to just 335,000, and some cautioned that a public holiday last Monday could have contributed to some of the large decline. The department, however, said there were no special factors influencing the data, which covered the survey period for the government's report on employment in November.

A four-week moving average meant to iron out week-to-week volatility fell 6,750 to 338,500.

"There is no evidence of a pickup in layoffs and the latest report on claims should be seen as a neutral to slightly positive reading on payroll growth," said John Ryding, chief economist at RDQ Economics in New York.

Factory Activity Up, Inflation Muted

Separately, a survey of factory purchasing managers showed activity picking up. Financial data firm Markit said its preliminary U.S. Manufacturing Purchasing Managers Index rose to an eight-month high of 54.3 from 51.8 in October.

Respondents linked the rebound from a one-year low touched last month partly to the end of a partial government shutdown and a rise in demand from domestic and overseas customers.

But the optimism over manufacturing was tempered somewhat by a regional factory survey showing a sharp slowdown in activity in the mid-Atlantic region in November.
Some economists said this was likely a delayed reaction to last month's 16-day government shutdown.

"The manufacturing data suggests there is still some momentum," said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York. "I think what you still need to see now is follow-through into job gains."

The data helped lift stocks on Wall Street, while the dollar climbed to a 4½ month high against the yen and U.S. Treasury debt prices rose.

The jobless claims and Markit factory data added to recent reports on nonfarm payrolls and retail sales that have suggested the economy is gaining momentum. Despite the improving growth picture, inflation remains virtually absent.

The Labor Department said its producer price index slipped 0.2 percent last month as gasoline prices tumbled, the largest decline since April.

Excluding volatile food and energy costs, producer prices rose 0.2 percent, boosted by the introduction of new motor vehicle models. Excluding cars and trucks, the core PPI was up only 0.1 percent.

During the last 12 months, overall producer prices have risen just 0.3 percent, with core prices up 1.4 percent. The data follows a report on Wednesday that showed consumer price inflation easing to a four-year low of 1 percent.

"With Europe still in a funk, and China struggling with recovery from a slowdown, there is no spark to get inflation rolling anytime soon," said Michael Montgomery, a U.S. economist at IHS Global Insight in Lexington, Mass.

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Another line of nonsense from Washington. Food alone has gone up 25% this year - of course we don't count things that we really need.

November 21 2013 at 11:48 AM Report abuse +2 rate up rate down Reply
2 replies to rreef1993's comment

Using tootsie rolls as your sole indicator for food is idiotic rreef.
let's see if you are ever capable of posting FACTS and not garbage.

November 21 2013 at 12:13 PM Report abuse -2 rate up rate down Reply
2 replies to exnyorker's comment

Show the facts putz

November 21 2013 at 2:35 PM Report abuse rate up rate down

Gas and groceries aren't factored into inflation.

November 21 2013 at 4:22 PM Report abuse +1 rate up rate down

25% ? We need mandatory Home Ec courses in schools if people are finding ways to spend 25% more for the same food items. That or basic math skills so as to understand fractions, percentage change, etc.

November 22 2013 at 11:08 AM Report abuse rate up rate down Reply

Just a month ago, dumbest 1%ers were wailing uncontrollably about the pain being wrought by the faux government shutdown.

Now we get reports of a firming labor market, on the heels of the interim reports of 204,000 jobs created in October, and a 0,4% increase in October retail sales, which easily beating consensus expectations, while hitting a new all-time high.

Thinking Americans knew all along that when dumbest 1%ers begin wringing their hands and gnashing their tooth, something good is afoot. If this is what happens when the government is temporarily slowed, could there possibly be anybody with a functioning brain cell left who isn't wondering why we wouldn't make it permanent.

November 21 2013 at 11:22 AM Report abuse +1 rate up rate down Reply

lol benigh if you do not buy food, gas, pay tuition, have health insurance, pay rent, buy a house or car.
The web site shawdow satistics says inflation would be at 8 to 10 percent a year if they calculated the CPI number like they did when Carter was pres before the took all the stuff out that mattered to 99 percent of people. Welcome to fantasyland were there is no inflation lol

November 21 2013 at 11:20 AM Report abuse +1 rate up rate down Reply

WASHINGTON -- The number of Americans filing new claims for unemployment benefits fell more than expected last week, suggesting some strengthening of labor market conditions.

Initial claims for state unemployment benefits dropped 21,000 to a seasonally adjusted 323,000, the Labor Department said. Economists polled by Reuters had expected first-time applications to fall to 335,000 last week.

LOL !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

November 21 2013 at 10:47 AM Report abuse +2 rate up rate down Reply

Adjusted, revised, all figures are Obama\'s democrat lies.

November 21 2013 at 9:37 AM Report abuse +2 rate up rate down Reply