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  • Feb 18th, 2005
  • Comments Off on US jobless claims fall again, import prices up
The number of Americans claiming initial jobless benefits fell unexpectedly last week in a show of strength for the US labour market, while an energy-driven rise in import prices offered mixed signals on inflation pressures. First-time claims for state unemployment insurance dropped 2,000 to 302,000 in the week ended February 12, the Labour Department said on Thursday. It was the third straight weekly decline and defied Wall Street expectations of a rise to 315,000.

US Treasury debt prices, already down, added to their losses as the surprisingly strong jobless report and a hint of imported inflation made it a little more likely the Federal Reserve would keep raising interest rates. The dollar strengthened against the euro.

The Labour Department said last week's decrease brought new jobless claims to the lowest level since October 2000, before the economy tipped into recession.

"This is confirmation that the labour markets are improving and it's consistent with the decline in unemployment we saw down to 5.2 percent in January," said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis.

The drop in claims was also likely to boost expectations on February's broader payroll report, due in March, which is compiled in the pay period that contains the 12th day of the month.

"A January to February survey week comparison of initial unemployment claims shows a decrease in claims of 16,000 over the month," Bank of America said in a research note. It estimated payroll employment would rise 225,000 in February.

Another closely watched gauge of future US economic activity fell 0.3 percent in January after two months of gains, serving to temper analyst optimism.

The New York-based Conference Board said its index of leading indicators fell last month to 115.6, with five of the 10 components falling, including vendor performance and consumer expectations. The coincident index of current economic activity was unchanged in January.

ENERGY BOOSTS IMPORT COSTS: Federal Reserve Chairman Alan Greenspan, in a second day of testimony to Congress on the economy, repeated that interest rates remain "fairly low," signaling they will keep rising.

His prepared remarks for delivery to the US House of Representatives Financial Services Committee were identical to those delivered on Wednesday to the Senate Banking Committee.

A separate report on Thursday showed the price of goods imported to the United States rose a higher-than-expected 0.9 percent in January, driven by higher petroleum costs.

Wall Street analysts had expected a 0.7 percent rise in import prices after declines in November and December.

The Labour Department said petroleum import prices surged 4.6 percent in January after falling 16.8 percent over the prior two months. Over the past year, petroleum import costs have risen 26.9 percent.

Excluding petroleum, import prices climbed a more modest 0.2 percent in January, suggesting inflation pressures remain relatively contained outside the energy sector.

Car import prices fell 0.1 percent, the first decrease since September 2003, while food and beverage costs declined 0.2 percent.

"Most of the rise in import prices is coming from oil. With non-petroleum prices, things have calmed down," said David Wyss, chief economist at Standard & Poor's Ratings Services in New York.

Wyss said a 0.7 percent rise in export prices - more than double analyst expectations of a 0.3 percent gain - was good news for US companies.

"This should show up pretty nicely in profits," he said.

The Labour Department attributed the export price rise to higher fuel and chemical prices.

Copyright Reuters, 2005


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