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U.S. job growth seen accelerating; unemployment rate steady

FILE PHOTO: Leaflets lie on a table at a booth at a military veterans' job fair in Carson, California October 3, 2014. REUTERS/Lucy Nicholson/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. employers likely stepped up hiring in June and boosted wages for workers, signs of labor market strength that could keep the Federal Reserve on course for a third interest rate increase this year.

According to a Reuters survey of economists, the Labor Department’s closely watched employment report on Friday will probably show that nonfarm payrolls increased by 179,000 jobs last month after gaining 138,000 in May.

The unemployment rate is forecast steady at a 16-year low of 4.3 percent. It has dropped five-tenths of a percentage point this year and matches the most recent Fed median forecast for 2017.

Economists say labor market buoyancy could also encourage the U.S. central bank to announce plans to start reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities in September.

“June’s employment report could provide sufficient evidence to Fed officials that they are still positioned to proceed with their monetary policy normalization plans in the second half of the year,” said Sam Bullard, a senior economist at Wells Fargo securities in Charlotte, North Carolina.

The Fed raised its benchmark overnight interest rate in June for the second time this year. But with inflation retreating further below the central bank’s 2 percent target in May, economists expect another rate hike only in December.

June’s anticipated employment gains would be close to the 186,000 monthly average for 2016 and reinforce views that the economy regained speed in the second quarter after a sluggish performance at the start of the year.

But the pace of job growth is expected to slow as the labor market hits full employment. There is growing anecdotal evidence of companies struggling to find qualified workers.

As a result, some companies are raising wages in an effort to attract and retain their workforces. Economists expect worker shortages to boost wage growth, which has remained stubbornly sluggish despite the tightening labor market.

EYES ON WAGES

Average hourly earnings are forecast increasing 0.3 percent in June after gaining 0.2 percent in May. That could lift the year-on-year increase in wages to 2.7 percent from 2.5 percent in May.

“The days of month after month of 200,000 jobs being created are likely behind us,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.

“We will see trend job growth continue to moderate. That doesn’t necessarily signal that the expansion is running out of juice or that a recession is imminent, it is just a symptom of a full-employment economy.”

The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

Republican President Donald Trump, who inherited a strong job market from the Obama administration, has pledged to sharply boost economic growth and further strengthen the labor market by slashing taxes and cutting regulation.

But Republicans have struggled with healthcare legislation and there are also worries that political scandals could derail the Trump administration’s economic agenda.

Job gains were likely broad in June. Manufacturing payrolls likely rebounded after factories shed 1,000 jobs in May. But employment in the automobile sector probably declined further as slowing sales and bloated inventories force manufacturers to cut back on production.

Ford Motor Co has announced plans to slash 1,400 salaried jobs in North America and Asia through voluntary early retirement and other financial incentives. Others, like General Motors are embarking on extended summer assembly plant shutdowns, which will temporarily leave workers unemployed.

Further job gains are likely in construction.

The retail sector is expected to have purged jobs for a fifth straight month as department store operators like J.C. Penney Co Inc, Macy’s Inc and Abercrombie & Fitch struggle against stiff competition from online retailers led by Amazon.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Slow U.S. jobs growth takes shine off dollar, stocks hold all-time highs

A U.S. five dollar note is seen in this illustration photo June 1, 2017. REUTERS/Thomas White/Illustration

By Vikram Subhedar

LONDON (Reuters) – The dollar retreated slightly after disappointing U.S. jobs growth data on Friday though world stocks clung on to record highs, having gained 11 percent so far this year.

Nonfarm payrolls increased 138,000 last month as the manufacturing, government and retail sectors lost jobs, the Labor Department said on Friday.

While the job gains could still be sufficient for the Federal Reserve to raise interest rates this month, the modest increase could raise concerns about the economy’s health after growth slowed in the first quarter.

“This number is not the kind of report that derails the Fed from raising rates in June,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York.

“We’re in a mature phase of the cycle, job growth is going to slow down. The Fed has been talking about this for over a year at this point and they are braced for that reality.”

The dollar index <.DXY>, which measures the greenback’s strength against a basket of major currencies, fell 0.3 percent.

Stock futures on Wall Street trimmed gains slightly and were last trading little changed.

Overnight, data showing a healthy uptick in private sector hiring and factory activity during May bolstered expectations that the U.S. economy was picking up speed and lifted U.S. stocks after two days of losses.

Those gains filtered through to global stocks, lifting the MSCI All-Country World index <.MIWD00000PUS> 0.4 percent to a record high and on track to post a seventh straight week of gains, the longest such run since 2010.

Stocks in Europe joined the party with German bluechips powering ahead to a record, up 1.6 percent. The UK’s FTSE 100 <.FTSE> also hovered near its highest-ever levels rose 0.4 percent.

So far this year investors have pumped $140 billion globally into stock funds, according to fund flow data from Bank of America Merrill Lynch and EPFR showed on Friday.

Global equities attracted $13.7 billion in the latest week to Wednesday, the largest inflows in five weeks, as investors loaded up on risk.

In commodities, however, oil prices resumed their slide with key futures contracts down more than 2 percent amid worries that U.S. President Donald Trump’s decision to abandon a global climate pact could spark more crude drilling in the United States, stoking a persistent glut in global supply.

Global benchmark Brent crude futures <LCOc1> fell to $49.63 a barrel, while U.S. West Texas Intermediate crude <CLc1> by more than a dollar to $47.36 per barrel.

(Reporting by Vikram Subhedar; Editing by Hugh Lawson and Keith Weir)

U.S. jobless claims fall; continuing claims at 28-1/2-year low

FILE PHOTO: Job seekers speak with potential employers at a City of Boston Neighborhood Career Fair on May Day in Boston, Massachusetts, U.S., May 1, 2017. REUTERS/Brian Snyder

WASHINGTON – New applications for U.S. jobless benefits unexpectedly fell last week and the number of Americans receiving unemployment aid hit a 28-1/2-year low, pointing to rapidly shrinking labor market slack.

Initial claims for state unemployment benefits decreased 4,000 to a seasonally adjusted 232,000 for the week ended May 13, the Labor Department said on Thursday. That pushed claims close to levels last seen in 1973.

Data for the prior week was unrevised and claims have now decreased for three consecutive weeks. Economists polled by

Reuters had forecast first-time applications for jobless benefits rising to 240,000.

Claims have now been below 300,000, a threshold associated with a healthy labor market, for 115 straight weeks. That is the longest such stretch since 1970, when the labor market was smaller. The labor market is close to full employment, with the

unemployment rate at a 10-year low of 4.4 percent.

A Labor Department official said there were no special factors influencing last week’s data and only claims for Louisiana had been estimated.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,750 to 240,750 last week, the lowest level since February.

Last week’s claims data covered the survey week for May’s nonfarm payrolls. The four-week average of claims fell 2,000 between the April and May survey periods suggesting further job gains this month. The economy created 211,000 job in April after

adding only 79,000 positions in March.

Labor market strength and tightening could allow the Federal Reserve to raise interest rates next month.

Expectations of a June rate hike have also been supported by data such as retail sales and industrial production, which suggested that economic growth picked up early in the second quarter after rising at an anemic 0.7 percent annualized rate in

the first quarter.

The U.S. central bank increased its benchmark overnight interest rate by 25 basis points in March and has forecast two more increases this year.

Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid dropped 22,000 to 1.90 million in the week ended May 6, the lowest level since November 1988.

The so-called continuing claims have remained below 2 million for five straight week. The four-week moving average of continuing claims declined 20,000 to 1.95 million, the lowest level since January 1974.

((Reporting by Lucia Mutikani; Editing by Paul Simao))

U.S. jobless claims fall; continuing claims lowest since 1988

FILE PHOTO: A "Now Hiring" sign hangs on the door to the Urban Outfitters store at Quincy Market in Boston, Massachusetts September 5, 2014. REUTERS/Brian Snyder

WASHINGTON – New applications for U.S. jobless benefits unexpectedly fell last week and the number of Americans on unemployment rolls hit a 28-1/2-year low, pointing to a rapidly tightening labor market that could encourage the Federal Reserve to raise interest rates in June.

Initial claims for state unemployment benefits dropped 2,000 to a seasonally adjusted 236,000 for the week ended May 6, the Labor Department said on Thursday. Claims for the prior week were unrevised.

Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 245,000.

Claims have now been below 300,000, a threshold associated with a healthy labor market, for 114 straight weeks. That is the longest such stretch since 1970, when the labor market was smaller. The labor market is close to full employment, with the

unemployment rate at a near 10-year low of 4.4 percent.

Labor market strength, also marked by a sharp rebound in job growth in April, has left financial markets anticipating further monetary policy tightening from the Fed in June.

The U.S. central bank increased its benchmark overnight interest rate by 25 basis points in March and has forecast two more rate hikes this year. The economy created 211,000 job in April after adding only 79,000 positions in March.

A Labor Department official said there were no special factors influencing last week’s data and only claims for Louisiana had been estimated.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 500 to 243,500 last week.

Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid tumbled 61,000 to 1.92 million in the week ended April 29, the lowest level since November 1988.

The four-week moving average of the so-called continuing claims fell 27,500 to 1.97 million, the lowest level since February 1974.

((Reporting By Lucia Mutikani; Editing by Andrea Ricci))

U.S. producer prices rise broadly in February

A combine drives over stalks of soft red winter wheat during the harvest on a farm in Dixon, Illinois, July 16, 2013. REUTERS/Jim Young

WASHINGTON (Reuters) – U.S. producer prices increased more than expected in February, and the year-on-year gain was the largest in nearly five years, pointing to a steady rise inflation pressures.

The Labor Department said on Tuesday that its producer price

index for final demand increased 0.3 percent last month after rising 0.6 percent in January. Economists polled by Reuters had forecast a 0.1 percent uptick.

In the 12 months through February, the PPI jumped 2.2 percent, the biggest advance since March 2012 and ahead of the 2.0 percent gain forecast in the Reuters poll. It followed a 1.6 percent increase in January.

Producer prices are rising as the prior weak readings, induced by cheap oil, drop out of the calculation. Crude oil prices have risen above $50 per barrel.

Also boosting price pressures are the dollar’s 1.5 percent drop against the currencies of the United States’ main trading partners since January and overall commodity price gains in tandem with a firming global economy.

A key gauge of underlying producer price pressures that excludes food, energy and trade services increased 0.3 percent in February, the biggest gain since April 2016. The so-called core PPI rose 0.2 percent in January.

Core PPI increased 1.8 percent in the 12 months through February after advancing 1.6 percent in January.

The Federal Reserve has a 2 percent inflation target and tracks a measure that is currently at 1.7 percent. Fed officials were due to start a two-day policy meeting later on Tuesday.

The U.S. central bank is expected to raise its overnight benchmark interest rate by 25 basis points to a range of 0.75 percent and 1.00 percent. It has projected three hikes in 2017.

In February, prices for final demand services increased 0.4

percent, accounting for more than 80 percent of the rise in the PPI. That was the biggest rise since June 2016 and followed a 0.3 percent gain in January.

The cost of energy products increased 0.7 percent last month, slowing from January’s 4.7 percent surge.

Wholesale food prices increased 0.3 percent after being unchanged in January. Healthcare costs rose 0.2 percent after a similar gain in January. Those costs feed into the Fed’s preferred inflation measure, the core personal consumption expenditures index.

The volatile trade services component, which measures changes in margins received by wholesalers and retailers, rose 0.4 percent last month after shooting up 0.9 percent in January.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Lisa Von Ahn)

U.S. import prices moderate on cheap fuel

A woman pumps gas at a station in Falls Church, Virginia December 16, 2014. REUTERS/Kevin Lamarque

WASHINGTON, March 9 (Reuters) – U.S. import price increases slowed in February on cheap fuel, but there were signs of a pickup in underlying imported inflation.

The Labor Department said on Thursday import prices rose 0.2 percent last month after an upwardly revised 0.6 percent increase in January. It was the third straight monthly increase.

In the 12 months through February, import prices accelerated 4.6 percent, the largest gain since February 2012, after rising 3.8 percent in January.

Economists polled by Reuters had forecast import prices ticking up 0.1 percent last month after a previously reported 0.4 percent increase in January.

Last month’s moderation in import prices is likely to be temporary amid strengthening global demand that is lifting prices for oil and other commodities.

Prices for imported fuels fell 0.7 percent last month after surging 7.2 percent in January. Import prices excluding fuels rose 0.3 percent. That was the first increase since July and followed a 0.1 percent dip the prior month.

The cost of imported food jumped 1.0 percent last month. Prices for imported capital goods were unchanged after slipping 0.1 percent in January. Imported consumer goods prices excluding automobiles increased 0.2 percent last month after a similar gain in January.

The report also showed export prices increased 0.3 percent in February after gaining 0.2 percent in January. Export prices were up 3.1 percent from a year ago. That was the biggest increase since December 2011 and followed a 2.4 percent rise in January.

Prices for agricultural exports increased 1.4 percent last month, boosted by rising vegetable prices, as well as higher prices for soybeans and corn. Agricultural export prices rose 0.1 percent in January.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

Consumer prices post largest gain in nearly four years

WASHINGTON, Feb 15 (Reuters) – U.S. consumer prices recorded their biggest increase in nearly four years in January as households paid more for gasoline and other goods, suggesting inflation pressures could be picking up.

The Labor Department said on Wednesday its Consumer Price Index jumped 0.6 percent last month after gaining 0.3 percent in December. January’s increase in the CPI was the largest since February 2013.

In the 12 months through January, the CPI increased 2.5 percent, the biggest year-on-year gain since March 2012.

The CPI rose 2.1 percent in the year to December.

Economists polled by Reuters had forecast the CPI rising 0.3 percent last month and advancing 2.4 percent from a year ago.

Inflation is trending higher as prices for energy goods and other commodities rebound as global demand picks up.

The so-called core CPI, which strips out food and energy costs, rose 0.3 percent last month after increasing 0.2 percent in December. That lifted the year-on-year core CPI increase to 2.3 percent in January from December’s 2.2 percent increase.

The Fed has a 2 percent inflation target and tracks an inflation measure which is currently at 1.7 percent.

Gradually firming inflation and a tightening labor market could allow the Fed to raise interest rates at least twice this year.

Fed Chair Janet Yellen told lawmakers on Tuesday that “waiting too long to remove accommodation would be unwise.”

The U.S. central bank has forecast three rate increases this year. The Fed hiked its overnight interest rate last December by 25 basis points to a range of 0.50 percent to 0.75 percent.

Last month, gasoline prices surged 7.8 percent, accounting for nearly half of the rise in the CPI. That followed a 2.4 percent increase in December.

Food prices edged up 0.1 percent after being unchanged for six straight months.

The cost of food consumed at home was unchanged after dropping for eight consecutive months.

Within the core CPI basket, rents increased 0.3 percent last month after a similar gain in December.

Owners’ equivalent rent of primary residence gained 0.2 percent in January after increasing 0.3 percent the prior month.

The cost of medical care rose 0.2 percent, with the prices for hospital services and prescription medicine both increasing 0.3 percent. Motor vehicle prices shot up 0.9 percent, the largest rise since November 2009.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters

Messaging: lucia.mutikani.thomsonreuters.com@reuters.net))

Higher energy prices boost producer inflation

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. producer prices rose more than expected in January, recording their largest gain in more than four years amid increases in the cost of energy products and some services, but a strong dollar continued to keep underlying inflation tame.

The Labor Department said on Tuesday its producer price index for final demand jumped 0.6 percent last month. That was the largest increase since September 2012 and followed a 0.2 percent rise in December.

Despite the surge, the PPI only increased 1.6 percent in the 12 months through January. That followed a similar gain in the 12 months through December. Economists polled by Reuters had forecast the PPI rising 0.3 percent last month and the year-on-year increase moderating to 1.5 percent.

The U.S. dollar pared losses against a basket of currencies after the data. Prices of U.S. Treasuries were mixed while U.S. stock index futures were largely flat.

The rise in producer prices comes as manufacturers report paying more for raw materials. The Institute for Supply Management’s (ISM) prices index surged in January to its highest level since May 2011. The ISM index, which is closely correlated to the PPI, has increased for 11 straight months.

The gains in PPI last month largely reflected increases in the prices of commodities such as crude oil, which are being boosted by a steadily growing global economy. Oil prices have risen above $50 per barrel.

But with the dollar strengthening further against the currencies of the United States’ main trading partners and wage growth still sluggish, the spillover to consumer inflation from rising commodity prices is likely to be limited.

A government report on Friday showed import prices excluding fuels fell in January for a third straight month. Data on Wednesday is expected to show the consumer price index increased 0.3 percent in January after a similar gain in December, according to a Reuters survey of economists.

Last month, prices for final demand goods increased 1.0 percent, the largest rise since May 2015. The gain accounted for more than 60 percent of the increase in the PPI. Prices for final demand goods advanced 0.6 percent in December.

Wholesale food prices were unchanged last month after climbing 0.5 percent in December. Healthcare costs rose 0.2 percent. Those costs feed into the Fed’s preferred inflation measure, the core personal consumption expenditures (PCE) index.

The volatile trade services component, which measures changes in margins received by wholesalers and retailers, shot up 0.9 percent in January after being unchanged in the prior month.

A key gauge of underlying producer price pressures that excludes food, energy and trade services rose 0.2 percent. That followed a 0.1 percent gain in December. The so-called core PPI increased 1.6 percent in the 12 months through January, slowing from December’s 1.7 percent gain.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Higher gasoline, rental costs boost U.S. consumer inflation

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. consumer prices rose in December as households paid more for gasoline and rental accommodation, leading to the largest year-on-year increase in 2-1/2 years and signaling that inflation pressures could be building.

The Labor Department said on Wednesday its Consumer Price Index rose 0.3 percent last month after gaining 0.2 percent in November. In the 12 months through December, the CPI increased 2.1 percent, the biggest year-on-year gain since June 2014. The CPI rose 1.7 percent in the year to November.

The increases were in line with economists’ expectations. The CPI rose 2.1 percent in 2016, up from a gain of 0.7 percent in 2015.

U.S. Treasury prices fell and the dollar strengthened against the euro and yen after the data. U.S. stock index futures were trading higher.

Rising inflation comes against the backdrop of a strengthening economy and tightening labor market, which raises the specter of a faster pace of interest rate increases from the Federal Reserve than currently anticipated.

The U.S. central bank has forecast three rate hikes this year. It raised its benchmark overnight interest rate by 25 basis points to a range of 0.50 percent to 0.75 percent last month.

Price pressures are likely to remain on an upward trend amid expectations of fiscal stimulus from the incoming Trump administration. Republican businessman-turned-politician Donald Trump, who will be sworn in as U.S. president on Friday, has pledged to increase spending on infrastructure and cut taxes.

The so-called core CPI, which strips out food and energy costs, rose 0.2 percent last month after the same increase in November. As a result, the core CPI increased 2.2 percent in the 12 months through December, from 2.1 percent in November.

The Fed has a 2 percent inflation target and tracks an inflation measure which is currently at 1.6 percent.

Last month, gasoline prices jumped 3.0 percent after climbing 2.7 percent in November. Food prices were unchanged for a sixth straight month. The cost of food consumed at home dropped for an eighth consecutive month.

Within the core CPI basket, housing continued its upward march in December. Rents increased 0.3 percent last month, with owners’ equivalent rent of primary residence also rising 0.3 percent. Rents increased 4.0 percent in 2016.

The cost of medical care rose 0.2 percent last month, with the prices for doctor visits unchanged. Prices for prescription medicine increased 0.2 percent. The cost of hospital services rose 0.3 percent.

There were price increases for a range of other goods and services last month including motor vehicle insurance, which increased 0.8 percent. The cost of airline fares rose 1.9 percent in December after falling 1.3 percent in November.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. jobless claims drop from five-month high

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits fell from a five-month high last week, pointing to labor strength that underscores the economy’s sustained momentum.

A tight labor market together with signs of a strengthening economy and steadily rising inflation will likely push the Federal Reserve to hike interest rates next week.

Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 258,000 for the week ended Dec. 3, the Labor Department said on Thursday. Claims for the prior week were unrevised.

It was the 92nd straight week that claims were below 300,000, a threshold associated with a healthy labor market. That is the longest stretch since 1970, when the labor market was much smaller.

U.S. financial markets were largely unmoved by the data as investors focused on the European Central Bank’s unexpected decision to cut its asset purchases starting in April.

Prices for U.S. government debt were trading lower, while U.S. stock index futures were higher. The U.S. dollar was stronger against a basket of currencies.

Last week’s drop in first-time applications for jobless benefits was in line with economists’ expectations. Claims hit a 43-year low in mid-November.

Economists had dismissed the recent back-to-back increases in filings, which had pushed claims to a five-month high, as an aberration. Claims tend to be volatile around this time of the year because of different timings of the Thanksgiving holiday.

A Labor Department analyst said there were no special factors influencing last week’s data and that no states had been estimated. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 1,000 to 252,500 last week.

The labor market is near full employment, with the government reporting last week that the unemployment rate fell to a nine-year low of 4.6 percent in November amid solid increases in nonfarm payrolls.

The Fed’s policy-setting committee meets next Tuesday and Wednesday. Economists expect the U.S. central bank to increase borrowing costs by at least 25 basis points at that meeting. The Fed raised its benchmark overnight interest rate last December for the first time in nearly a decade.

Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid fell 79,000 to 2.01 million in the week ended Nov. 26. That followed two straight weekly increases.

The four-week average of the so-called continuing claims slipped 9,500 to 2.03 million.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

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