US cost of living down most in six years

Cheaper energy is freeing up money for Americans to spend elsewhere

THE COST of living in the US fell in January by the most in six years, led by a plunge in energy prices that so far is not spreading to services.

The consumer-price index declined 0.7 percent after dropping 0.3 percent in December, a Labor Department report showed yesterday in Washington. The median forecast of economists surveyed called for a 0.6 percent decrease. Excluding volatile food and fuel, the socalled core measure rose 0.2 percent, more than projected.

The core reading was pro- pelled by gains in services such as rents and hotel rates that support the Federal Reserve’s view that total inflation will eventually return towards their 2 percent goal once the plunge in fuel costs abates.

At the same time, cheaper energy is freeing up money for Americans to spend elsewhere, helping to sustain demand and underpin growth.

For consumers, the drop in energy costs “is generally good as it increases their purchasing power”, Josh Shapiro, the chief US economist at Maria Fiorini Ramirez in New York, said before the report.

“The Fed’s going to look at the numbers and say: ‘We expected it’.”

Jobless claims

The number of Americans filing for unemployment benefits rose by the most since December 2013 last week from a week earlier, a sign of uneven progress in the labour market.

Jobless claims increased by 31 000 to 313 000 in the week to February 21 from a revised 282 000 in the prior period, a Labor Department report revealed yesterday in Washington.

The median forecast of 49 economists surveyed by Bloomberg saw claims rising to 290 000.

Looking past the weekly data, which can often be volatile, job-market fundamentals have improved as payroll growth accelerates and Americans stream into the labour force looking for work.

Continued improvement will be needed to generate faster wage growth and support consumer spending, which accounts for 70 percent of the economy.

Durable goods

Orders for durable goods rose in January for the first time in three months, showing manufacturing may be starting to stabilise as companies look beyond weaker global markets and cutbacks among energy producers.

Bookings for goods meant to last at least three years increased 2.8 percent after a re- vised 3.7 percent decrease the prior month, data from the Commerce Department showed yesterday in Washington.

Non-military capital goods orders excluding aircraft rose 0.6 percent after a 0.7 percent decrease in December.

Business demand rose for equipment including machinery and computers, indicating domestic sales are underpinning manufacturing.

At the same time, orders have been held back as factories contend with tepid sales to overseas customers and a slump in oil prices prompts producers to limit investment.

Payroll growth accelerates and Americans stream into the labour force looking for work.