U.S. jobless-benefits claims drop, a sign firms retaining staffs
Filings for U.S. unemployment benefits fell last week, indicating companies were holding on to workers even as the coronavirus outbreak starts to weigh on economic activity.
The Labor Department said Thursday that applications for unemployment benefits, a good proxy for layoffs, dropped by 4,000 in the week that ended Saturday to a seasonally adjusted 211,000. Claims had fallen by 4,000 in the previous week as well.
The figures were lower than the median estimate in Bloomberg’s survey of economists. The four-week average, a less-volatile measure, increased by 1,250 to 214,000.
Applications for unemployment benefits are being watched for any signs that the virus has started to trigger major layoffs.
Some economists are already warning that the economic fallout from the virus could be severe enough to push the global economy into a recession.
Those concerns have already shown up on Wall Street where the stock market has suffered record declines over the past two weeks.
Some analysts argue that the economy should be strong enough to withstand the adverse effects of the virus. Last week, the government reported that the unemployment rate in FebHAVANA
ruary returned to a 50-year low of 3.5% as employers added 273,000 new jobs, evidence that the labor market was in good shape before the coronavirus began spreading across the country.
A separate Labor Department report on Thursday showed that a key measure of U.S. producer prices decreased 0.6% in February from the month before. That was the largest drop in more than five years.
While the coronavirus has yet to have a significant impact on most U.S. economic data, the details of the report on wholesale and business prices suggested the pandemic may be starting to push down inflation.
The department said the decline in its producer price index, which measures price pressures before they reach the consumer, followed a 0.5% rise in January. It was the sharpest decline in wholesale prices since a similar 0.6% drop in January 2015.
Core inflation, which excludes energy and food, was also down in February, dropping 0.3%. Over the past year, producer prices have risen a modest 1.3% and core prices are up just 1.4%.
On Wednesday, the government had reported that consumer prices edged up a slight 0.1% and are up 2.3% over the past year.
The Federal Reserve seeks to manage monetary policy to hit its target of 2% annual increases in inflation.
The central bank last week slashed its policy interest rate by one-half percentage point, the biggest cut since the 2008 financial crisis. Many economists are looking for another half-point cut when the Fed meets next week, expecting the central bank to provide more protection for the U.S. economy against the adverse effects of the spreading coronavirus.
A big reason the Fed has the leeway to cut interest rates is that inflation has remained tame throughout this recovery even as unemployment fell to half-century lows.
For February, energy prices dropped 3.6%, the biggest drop since December 2018, with gasoline prices down 6.5%. Analysts believe there will be further declines in energy prices because of reduced travel from fears about the coronavirus and a production dispute between Saudi Arabia and Russia.
Food prices at the wholesale level dropped 1.6% in February, the biggest decline since a 1.7% drop in February 2015.