The number of Americans filing
for unemployment aid unexpectedly fell last week and consumer sentiment rose
early this month amid continued optimism over household finances, suggesting a
sharp slowdown in job growth in March was an aberration.
While other data on Thursday
showed producer prices falling in March for the first time in seven months,
prices recorded their biggest year-on-year increase in five years. The reports
pointed to a steadily firming economy and could encourage the Federal Reserve
to increase interest rates again in June.
"Today's reports are
generally consistent with the Fed's narrative that the economy is close to full
employment and some inflationary pressures are building," said Ryan Sweet,
senior economist at Moody's Analytics in West Chester, Pennsylvania.
Initial claims for state
unemployment benefits slipped 1,000to a seasonally adjusted 234,000 for the
week ended April 8, the Labor Department said. That was the third straight
weekly decline in claims and left them near a 44-year low of 227,000 hit in
February.
Claims have now been below
300,000, a threshold associated with a healthy labor market, for 110 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 4.5 percent. Economists had forecast first-time
applications for jobless benefits rising to 245,000 last week.
The low level of claims suggests
that a sharp slowdown in job growth in March was a blip and the labor market is
tightening. Nonfarm payrolls increased by 98,000 jobs last month, the fewest
since last May.
"Temporarily higher
mid-March readings probably in large part reflected weather drags that were
apparent in the March employment report, and much stronger results in the first
half of April are pointing to a reacceleration in payrolls in April," said
Ted Wieseman, an economist at Morgan Stanley in New York.
A separate survey from the
University of Michigan showed its consumer sentiment index rising to a reading
of 98.0 early this month from 96.9 in March.
The survey's current economic
conditions index jumped to its highest level since 2000, with an increase in
the share of households reporting an improvement in their finances.
SPENDING MAY ACCELERATE
Strong consumer sentiment could
suggest an acceleration in consumer spending in the second quarter after an apparent
slowdown at the start of the year. A surge in confidence in late 2016 and early
this year failed to translate into stronger spending.
The dollar fell against a basket
of currencies as investors assessed comments by President Donald Trump to the
Wall Street Journal late on Wednesday that the dollar was "getting too
strong" and that he liked a "low-interest rate policy."
U.S. Treasury yields briefly fell
to a five-month low, while stocks on Wall Street were little changed. The Fed
raised its benchmark overnight interest rate by a quarter of a percentage point
last month and has said it expected to increase borrowing costs at least twice
more this year.
In another report on Thursday,
the Labor Department said its producer price index for final demand slipped 0.1
percent last month, the first decline since August. The PPI gained 0.3 percent
in February.
Despite last month's dip in
prices, the PPI shot up 2.3 percent in the 12 months through March. That was
the biggest increase since March 2012 and followed a 2.2 percent jump in
February.
A 0.1 percent dip in prices for
final demand services accounted for three quarters of the drop in the PPI in
March. Energy prices fell 2.9 percent, the first decline since August, with the
cost of gasoline tumbling 8.3 percent.
With oil prices rising in recent
days and recovering nearly all of March's losses, monthly producer prices are
likely to resume their upward trend.
The dollar's 2.8 percent drop
this year against the currencies of the United States' main trading partners is
also keeping the underlying trend in producer prices elevated.
Final demand goods less food and
energy increased 0.4 percent last month after edging up 0.1 percent in
February.