* Weekly jobless claims rise 13,000
* Producer prices unchanged in March
* Trade balance narrows sharply in February
* First-quarter GDP forecasts raised on trade data
By Lucia Mutikani
WASHINGTON, April 12 (Reuters) – The number of Americans
filing for jobless aid hit a two-month high last week and more
applications were received in the prior week than initially
reported, suggesting a cooling in the labor market recovery.
Initial claims for state unemployment benefits increased
13,000 last week to a seasonally adjusted 380,000, the Labor
Department said on Thursday, defying economists’ expectations
for a drop to 355,000. The prior week’s count was revised to
show 10,000 more applications than previously reported.
While economists cautioned against reading too much into the
report, saying problems adjusting the data for seasonal
fluctuations around Easter may have pushed last week’s figure
higher, they said it nonetheless provided a worrying signal.
“It certainly bolsters the view that things are starting to
slow down,” said Tim Quinlan, an economist at Wells Fargo
Securities in Charlotte, North Carolina.
The data comes in the wake of a report on Friday that showed
the economy created only 120,000 jobs last month, the fewest
since October. The unemployment rate fell to a three-year low of
8.2 percent, but largely as people gave up the search for work.
Economists noted that initial claims tend to be volatile at
this time of year due to shifts in the timing of Easter and
school spring breaks, making it difficult for the Labor
Department to adjust the data for seasonal variations.
Claims have risen in nine of the last 11 Easter holiday
weeks and have over the past year tended to increase in the
first full week of a quarter.
“We’re also getting some payback for a mild winter. Mild
temperatures kept construction workers on the payrolls and that
is causing some issues with the seasonal adjustment as well,”
said Ryan Sweet, a senior economist at Moody’s Analytics in West
Chester Pennsylvania.
“The increase caught our attention, but the next few weeks
will be very telling. If claims continue to tick higher then it
will be a signal that the sword over the jobs market is real.
For now we take this report with a grain of salt.”
The four-week moving average for new claims, considered a
better measure of labor market trends, rose moderately.
TRADE GAP NARROWS SHARPLY
Investors on Wall Street ignored the claims data and
bought U.S. stocks, encouraged by a decline in yields of some
euro zone government bonds and talk of strong Chinese growth
data.
U.S. Treasury debt prices edged down, while the
dollar fell against a basket of currencies.
Away from the labor market, there was good news for the U.S.
economy.
A report from the Commerce Department showed the nation’s
trade gap shrank 12.4 percent to $46 billion in February as
exports hit a record high. It was the biggest month-to-month
decline in the trade shortfall since May 2009.
The shrinking of the deficit prompted economists, including
those at Goldman Sachs, to lift their estimates for first
quarter economic growth. Goldman Sachs now see U.S. gross
domestic product expanding at a 2.5 percent annual pace instead
of 2.3 percent estimated before.
The economy grew at a 3 percent rate in the fourth quarter.
A third report showed little sign of inflation pressures.
The Labor Department said prices received by U.S. producers were
unchanged in March after advancing 0.4 percent in February,
while wholesale prices excluding volatile food and energy costs
rose 0.3 percent.
That should allow the Federal Reserve to keep interest rates
ultra low and even embark on a third round of asset purchases or
quantitative easing should job growth completely stall.
New York Federal Reserve Bank President William Dudley said
on Thursday the U.S. central bank was gathering more data to
determine whether last month’s weak employment report was just a
weather-related setback or a sign the recovery is losing
momentum again.
“The somewhat softer March labor market report that was
released last Friday may reflect the earlier positive influence
of the mild weather on job creation in January and February,
although other less sanguine interpretations are also
plausible,” he said.
Last month, over one third of the rise in the core Producer
Price Index was attributed to rising costs for light motor
trucks. Higher prices for passenger cars, soaps and detergents
also contributed to the advance.
In the 12 months through March, wholesale prices increased
2.8 percent, the smallest increase since June 2010, after
advancing 3.3 percent in February.
“Price pressures have eased but are not gone because of
recession in Europe and slowing output growth in China,” said
Michael Montgomery, a U.S. economist at IHS Global Insight in
Lexington, Massachusetts.
