USA: unemployment down; producer prices rise

The number of Americans filing new claims for unemployment benefits unexpectedly dropped last week, once again demonstrating the economy’s resilience despite the tightening of monetary policy.

A second report from the Labor Department showed this Thursday an acceleration in monthly producer prices in January. The producer price index for final demand rebounded 0.7% last month, after declining 0.2% in December.

In the 12 months to January, the PPI rose 6.0% after advancing 6.5% in December. Economists had forecast it to rise 0.4% and rise 5.4% year-on-year.

Initial claims for jobless benefits fell 1,000 to 194,000, seasonally adjusted, for the week ending February 11. Economists polled by Reuters had forecast 200,000 applications for the past week.

This item remains low despite layoffs in the technology sector and other industries highly sensitive to interest rates. Some of the laid-off workers are likely finding new jobs or delaying applying due to severance pay.

Companies have generally been reluctant to lay off workers after experiencing hiring difficulties during the pandemic.

The National Federation of Independent Business reported this week that the proportion of small firms reporting job openings increased in January, suggesting that “owners continue to see opportunities to grow their businesses.”

The resilience of the labor market, marked by the lowest unemployment rate in more than 53 years, is one of the factors that have made financial markets anticipate that the Federal Reserve could continue raising interest rates until the boreal summer.

Retail sales registered the biggest increase in almost two years in January, while disinflation bottomed out last month, government data showed this week.

The US central bank has raised interest rates by 450 basis points since last March, from a level close to zero to a range between 4.50% and 4.75%, most between May and December.

Analysts expect two additional hikes of 25 basis points in March and May. Financial markets are betting on another rise in June.

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