(MENAFN- Khaleej Times) The number of Americans filing new claims for unemployment benefits dropped for a third straight week last week, the latest indication the labour market recovery was gaining traction.
Other data on Thursday showed a spike in the cost of gasoline pushed up producer prices last month, but the lack of broad price pressures gives the Federal Reserve scope to maintain its very accommodative monetary policy stance even as the job market strengthens.
Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 332,000, the Labour Department said. Economists polled by Reuters had expected first-time applications for jobless aid to rise to 350,000.
The four-week moving average for new claims, a better measure of labour market trends, fell 2,750 to 346,750, the lowest level in five years - suggesting a firming in underlying labor market conditions.
The report follows news last week that non-farm payrolls increased 236,000 in February, with the unemployment rate falling to a four-year low of 7.7 per cent.
"This report reinforced the message we got from last Friday's payroll report. There is a speed-up in the economy. The economy is healing," said Pierre Ellis, senior global economist at Decision Economics in New York.
In a second report, the Labour Department said its seasonally adjusted Producer Price Index increased 0.7 per cent last month after advancing 0.2 per cent in January. In the 12 months through February, prices received by farms, factories and refineries were up 1.7 per cent, the fastest rise since October and followed a 1.4 per cent gain the prior month.
However, underlying inflation pressures remained contained, with wholesale prices excluding volatile food and energy costs rising 0.2 per cent after a similar advance in January.
In the 12 months through February, core PPI was up 1.7 per cent, the smallest rise since January 2011. It had increased 1.8 per cent in January.
While gasoline prices pushed up overall PPI last month, they have started to decline from their lofty levels, which should keep inflation pressures benign and boost consumers' purchasing power.
The steady job gains are helping to prop up wages, supporting domestic demand. Though layoffs have ebbed, sluggish domestic demand has made companies cautious about ramping up hiring.
Meanwhile, the current-account deficit in the US unexpectedly narrowed in the fourth quarter, helped by a the biggest surplus on income in a year.
The gap, the broadest measure of international trade because it includes income payments and government transfers, shrank 1.8 per cent to $110.4 billion from a revised $112.4 billion shortfall in the prior quarter, a Commerce Department report showed today in Washington. The median forecast of economists in a Bloomberg survey called for a $112.5 billion deficit in the final three months of 2012.
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