WASHINGTON?The number of people claiming new jobless benefits rose slightly last week, the latest sign of a persistently weak U.S. labor market, while inflation resumed its climb in July as gasoline prices rebounded and food costs continued to rise. Underlying prices increased only marginally.
Initial jobless claims rose by 9,000 to a seasonally adjusted 408,000 in the week ended Aug. 13, the Labor Department said Thursday. Claims filed in the previous week were upwardly revised to 399,000 from an originally reported 395,000. Economists surveyed by Dow Jones Newswires had forecast claims would rise to 400,000. Economists generally think the economy is adding more jobs than it is shedding when claims drop below that level.
The four-week moving average of new claims, a more reliable indicator of the labor market's recent performance, fell by 3,500 to 402,500.
A Labor Department official said there was nothing unusual in the latest numbers.
The Federal Reserve last week said it expects the U.S. economy to remain so weak that it is likely to need the support of near-zero interest rates for another two years. Consumer spending has slowed sharply this year, and debt concerns in the U.S. and Europe are contributing to turmoil in financial markets, spawning fears another recession may develop.
Thursday's report showed the number of continuing unemployment-benefit claims?those drawn by workers for more than a week?rose by 7,000 to 3,702,000 in the week ended Aug. 6. Continuing claims are reported with a one-week lag.
The unemployment rate for workers with unemployment insurance for the week ending Aug. 6 was unchanged at 2.9%.
Fed officials said after their latest policy-setting meeting last week that they expect the unemployment rate, which stood at 9.1% in July, to decline only gradually.
The state-by-state breakdown in Thursday's report, which is also released with a lag, showed the biggest gain in claims was in California, where claims grew by 7,848. The state cited increased layoffs in the service industries for the rise.
Florida, with a decline of 2,580 the week ended Aug. 6, had the largest drop in claims. It cited fewer layoffs in the agriculture, manufacturing, construction, service and retail industries.
Separately, consumer prices rose a seasonally adjusted 0.5% from June, the largest monthly increase since March, the Labor Department said. It followed a 0.2% decline from May to June, when lower prices for gasoline helped inflation come down for the first time in a year.
Underlying inflation, which excludes volatile energy and food costs and is considered a better predictor of inflation trends by the Federal Reserve, rose by a monthly 0.2% in July. Economists surveyed by Dow Jones Newswires had forecast a 0.3% rise in overall prices and a 0.2% gain for underlying inflation.
The inflation report comes amid mixed signals for the economy and worries about a weaker U.S. outlook. The Fed could be constrained from taking further action?such as buying more bonds to also keep long-term borrowing rates low?if inflation measures stay above its informal target of close to 2%.
Thursday's report showed that on an annual basis, consumer prices were up by 3.6% in July, above the Fed's target. But stripping out energy and food, inflation was only 1.8% higher over a 12-month span.
Energy prices rose by 2.8% in July, after tumbling by 4.4% in June. Gasoline prices, which rose by 4.7% in July, accounted for almost half of the rise in inflation. Food prices were up 0.4% in July, double the increase registered the previous month.
The Fed believes inflation will come down in coming months as steadily lower prices for oil and food work their way through the economy. It expects the weak economy and high unemployment rate to prevent companies from raising prices and workers from demanding higher pay.
Shelter prices, which includes rent and have a large weighting in the consumer price index, rose by 0.3% in July following a 0.2% increase the previous month.
Without rounding, the CPI report showed consumer prices rose by 0.500% in July from June. Excluding food and energy items, consumer prices 0.224% without rounding.
Meanwhile, real average weekly earnings fell 0.1% in July. Since peaking in October 2010, wages adjusted for inflation have fallen 1.3%, showing that wage pressure remain subdued and poses little threat to inflation. Labor costs make up a big part of overhead.
