The number of Americans filing for unemployment benefits rose less than expected last week and the underlying trend remained consistent with a tightening labor market that is starting to spur faster wage growth.
Other data on Thursday showed import prices posting their largest gain in nearly five years in the 12 months through December, suggesting that inflation could soon push higher. Import prices are being driven by rising oil prices, but a strong dollar could mitigate some of the impact on inflation.
Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 247,000 for the week ended Jan. 7, the Labor Department said. Jobless claims have now been below 300,000, a threshold associated with a healthy labor market, for 97 consecutive weeks. That is the longest stretch since 1970, when the labor market was much smaller.
Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 255,000 in the latest week. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1,750 to 256,500 last week.
U.S. financial markets were little moved by the data. The labor market is considered to be at or near full employment, with the unemployment rate near a nine-year low of 4.7 percent. Tightening labor markets are starting to push up wage growth.
Average hourly earnings increased 2.9 percent in the 12 months through December, the largest gain since June 2009.
Rising wages and President-elect Donald Trump’s pledge to cut taxes are expected to boost consumer spending and support economic growth through much of this year.
In a second report, the Labor Department said import prices increased 0.4 percent last month after slipping 0.2 percent in November. In the 12 months through December, import prices jumped 1.8 percent, the largest gain since March 2012, after edging up 0.1 percent in the 12 months through November. Import prices excluding petroleum fell 0.2 percent in December after being unchanged the prior month.
Import prices are rising as the drag from lower oil prices fades. Oil prices have risen above $50 per barrel. But underlying import prices are likely to remain soft amid sustained dollar strength. The dollar gained 4.4 percent against the currencies of the United States’ main trading partners last year.
A tighter labor market and the proposed fiscal stimulus are expected to stoke inflation, which could prompt the Federal Reserve to raise interest rates at a faster pace than currently envisaged. The Fed raised its benchmark overnight interest rate last month by 25 basis points to a range of 0.50 percent to 0.75 percent. The U.S. central bank has forecast three rate hikes for this year.
Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid fell 29,000 to 2.09 million in the week ended Dec. 31. That was the first decline in the so-called continuing claims since November.
The four-week average of continuing claims rose 16,500 to 2.09 million.