Jobless Claims Fall to 4-Year Low but Drop May Be Temporary

Thursday, 12 Jul 2012 08:36 AM

 

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
The number of Americans lining up for jobless benefits last week fell to a four-year low, a hopeful sign for the struggling labor market although some of the improvement may be temporary, government data showed on Thursday.

A separate report showed import prices falling sharply in June, fresh evidence of a cooling global economy but also a reminder that a drop in gasoline prices could help U.S. consumers.

The Labor Department said new claims for state unemployment benefits dropped 26,000 to a seasonally adjusted 350,000.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

The drop, which brought new claims to their lowest level since March 2008, was much steeper than Wall Street economists expected.

"It's welcome news," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

U.S. stock index futures trimmed losses after the data. U.S. bond prices held gains, while the dollar fell against the yen.

The prior week's figure was revised slightly higher to 376,000 from the previously reported 374,000.

Hiring by U.S. companies slowed dramatically in the second quarter as employers grew worried about Europe's snowballing debt crisis, which is weighing on the global economy. Many employers also are concerned over the possibility the U.S. government may cut spending and let tax cuts expire next year, which could send the economy into recession.

The level of new claims for unemployment insurance was the lowest since March 2008 - the early days of the 2007-2009 recession.

The fall in claims data suggests that while employers are holding the line on hiring, at least they aren't picking up the pace of layoffs. That could boost hopes the stalling in job creation might prove temporary.

Still, the jobless claims data had an important caveat.

A Labor Department official noted that part of the drop might be due to some auto manufacturers breaking with tradition and keeping their plants open during the first week of July to meet demand.

Many auto plans normally close during that week to retool for new models.

"It seems like the Labor Department is pretty adamant that this is more of a wonky seasonals adjustment than something we need to put too much stock in," said Michael Hanson, U.S. economist at Bank of America-Merrill Lynch. "The underlying trend in claims is probably still in the 370,000 range."

The four-week moving average for new claims, a better measure of labor market trends, fell 9,750 to 376,500. That is still a significant drop, although the average is only at its lowest since May.

In a separate report, the Labor Department said import prices fell last month by the most in more than three years, mostly due to a plunge in the cost of imported oil.

That puts U.S. inflation pressures on ice for now. Overall import prices dropped 2.7 percent in the third straight monthly decline.

Import prices have only risen once in the last seven months. June's decline was the steepest since December 2008.

The decline last month was even more than analysts had expected, and could give the U.S. Federal Reserve more scope to ease monetary policy if policymakers think the economy needs it.

The Fed targets annual inflation at 2 percent, and policymakers' preferred measure of inflation showed prices up 1.5 percent in May from a year earlier.

On Wednesday, minutes from the central bank's June meeting showed the Fed is open to buying more Treasury bonds to stimulate the economy, but the recovery might need to weaken for a consensus to build.

Prices for imported petroleum plunged 10.5 percent, also the sharpest drop since December 2008.

Even stripping out fuels and food, import prices were down 0.3 percent. That could be a sign of the recent cooling in the global economy, which has been largely caused by Europe's debt crisis.

China's economy is also showing signs it is slowing.

The Labor Department report also showed export prices fell 1.7 percent last month, the second consecutive monthly decline.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video


© 2014 Thomson/Reuters. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

McConnell Opposes Obama on Cuba

Monday, 22 Dec 2014 18:40 PM

Senate Republican leader Mitch McConnell said on Monday he opposed President Barack Obama's move to normalize relations  . . .

North Korea's Internet Access Crashes, Reason Unknown

Monday, 22 Dec 2014 14:06 PM

North Korea's access to the Internet has been hit with outages and is offline today, according to a network-monitoring c . . .

High Court Sets March Hearing in Obamacare Lawsuit

Monday, 22 Dec 2014 18:28 PM

High noon for Obamacare is scheduled for March 4, when the Supreme Court has announced that it will hear verbal argument . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved