US jobless claims hit more than 1-year high; import prices rise

Morning commuters ride the subway in New York, on May 11, 2016.
Morning commuters ride the subway in New York, on May 11, 2016. PHOTO: AFP

WASHINGTON (REUTERS) - The number of Americans filing for unemployment benefits unexpectedly rose last week to the highest level in more than a year, raising further concerns about the health of the labour market in the wake of a slowdown in job gains in April.

Other data on Thursday showed import prices increased in April for a second straight month, suggesting that the disinflationary impulse from a strong dollar and lower oil prices, which has helped to hold inflation well below the Federal Reserve's 2 per cent target, was fading.

Initial claims for state unemployment benefits increased 20,000 to a seasonally adjusted 294,000 for the week ended May 7, the highest level since late February 2015, the Labor Department said.

"Jobless claims have moved sharply higher in recent weeks, reinforcing concerns that labor market conditions have softened in response to the slowdown in the economy in recent months,"said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.

There was a surge last week in unadjusted jobless claims in New York state, likely as some striking Verizon workers filed for unemployment benefits. Unadjusted claims also rose in Pennsylvania and Michigan.

Despite the jump last week, claims have remained below 300,000, a threshold associated with healthy job market conditions, for 62 consecutive weeks, the longest stretch since 1973.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, increased 10,250 to 268,250 last week, the highest level in almost three months.

The claims report came on the heels of data last week showing nonfarm payrolls increased only 160,000 in April, the smallest gain in seven months, after advancing by 208,000 in March. The signs of labour market weakness suggest the Fed is unlikely to raise interest rates before the end of the year.