Jobless claims in US saw unexpected dip last week

The number of Americans filing for unemployment benefits unexpectedly fell last week, suggesting the labour market remains strong despite a sharp slowdown in job growth in March.

Other data on Thursday showed producer prices falling in March for the first time in seven months. Prices, however, recorded their biggest year-on-year increase in five years. The reports pointed to a steadily firming economy and could allow the Federal Reserve to increase interest rates again in June.

Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 234,000 for the week ended April 8, the Labor Department said. That was the third straight weekly decline in claims and left them not too far from a 44-year low of 227,000 hit in February.

"Claims remain low, adding to the evidence that the slowing in payrolls in March was due to weather effects," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.

Claims have now been below 300,000, a threshold associated with a healthy labour market, for 110 straight weeks. That is the longest such stretch since 1970, when the labour market was smaller. The labour market is near full employment, with the unemployment rate close to a 10-year low of 4.5 per cent. Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 245,000 last week. Claims tend to be volatile around this time of the year because of the different timings of spring and Easter holidays.

The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, fell 3,000 to 247,250 last week. The low level of claims suggests that a sharp slowdown in job growth in March was an aberration and that the labour market continues to tighten.

Nonfarm payrolls increased by 98,000 jobs last month, the fewest since last May.

U.S. financial markets were little moved by the data as investors continued to digest comments by President Donald Trump to the Wall Street Journal late on Wednesday that the dollar was "getting too strong" and that he preferred a "low-interest rate policy."

The Fed raised its benchmark overnight interest rate by a quarter of a percentage point last month and has said it expected to increase borrowing costs at least twice more this year.

Inflation rising

In another report on Thursday, the Labor Department said its producer price index for final demand slipped 0.1 per cent last month. That was the first decline since August and followed a 0.3 percent gain in February.

Despite last month's dip in prices, the PPI shot up 2.3 per cent in the 12 months through March. That was the biggest gain since March 2012 and followed a 2.2 per cent jump February.

Prices for final demand services fell 0.1 per cent, accounting for three-quarters of the drop in the PPI in March. That followed a 0.4 per cent gain in February. Energy prices fell 2.9 per cent, with the cost of gasoline tumbling 8.3 per cent. Energy prices increased 0.6 per cent in February.

With oil prices rising in recent days and recovering nearly all of March's losses on reports Saudi Arabia wants to extend production cuts enacted in January for another six months, monthly producer prices are likely to resume their upward trend.

Overall domestic price pressures are rising, with most consumer inflation measures now above the Fed's 2 per cent target. The increases reflect in part an ebb in the dollar's rally and strengthening domestic demand.

The dollar has declined 2.8 per cent against the currencies of the United States' main trading partners since January and commodity prices have been rising as the global economy firms.

A key gauge of underlying producer price pressures that excludes food, energy and trade services edged up 0.1 percent in March. The so-called core PPI rose 0.3 per cent in February.