WASHINGTON (Reuters) - More Americans than expected filed new claims for jobless aid last week and consumer prices were flat in January, supporting the argument for the Federal Reserve to maintain its very accommodative monetary policy stance.
Initial claims for state unemployment benefits
increased 20,000 to a seasonally adjusted 362,000, the Labor Department
said on Thursday.
It said in a second report that consumer prices were
flat for a second consecutive month in January. The data comes amid
growing signs of divisions at the Fed over its bond buying program aimed
to stimulate the sluggish economic recovery.
"The job market is gradually improving but not fast
enough for the Fed to remove accommodation. We still think a Fed rate
hike is a late 2014 to early 2015 event," said Jacob Oubina, a senior
economist at RBC Capital Markets in New York.
Concerns over tepid job growth prompted the U.S.
central bank last year to embark on an open-ended bond buying program.
It said it would keep up the program, which it hopes will push down
borrowing costs, until it saw a substantial improvement in the outlook
for the labor market.
The Fed also has committed to hold interest rates near
zero until unemployment reaches 6.5 percent, provided inflation does not
threaten to push over 2.5 percent.
However, minutes of the January 29-30 policy meeting
published on Wednesday showed some Fed policymakers feel the central
bank may have to slow or stop the asset purchases before it sees an
acceleration in job growth because of concerns over the costs of the
Economists polled by Reuters had expected first-time
jobless applications to rise to 355,000. Last week's data covered the
survey period for the February nonfarm payrolls report. Claims were up
27,000 between the January and February survey periods.
But this probably does not suggest any material change
in the pace of job growth given that claims been very volatile since
January because of difficulties smoothing the data for seasonal
With inflation pressures well contained and the labor market only gradually improving, a shift in Fed policy is unlikely.
Last month, the Consumer Price Index was held back by
weak gasoline prices and food prices, which were unchanged after rising
over the past months, the Labor Department said.
Economists polled by Reuters had expected the CPI to
edge up 0.1 percent. In the 12 months through January, consumer prices
rose 1.6 percent, the smallest gain since July. They had advanced 1.7
percent in December.
However, consumer prices excluding food and energy rose
0.3 percent - the largest gain since May 2011. The so-called core CPI
had increased 0.1 percent in December.
In the 12 months through January, core CPI increased
1.9 percent after rising by the same margin in December. That is just
below the Fed's 2 percent goal.
Gasoline prices fell 3.0 percent after dropping 1.9
percent the prior month. But the decline in gas probably has run its
course as prices at the pump have increased 44 cents so far this year.
Elsewhere, apparel prices increased 0.8 percent after
gaining 0.1 percent in December. New motor vehicle prices rose 0.1
percent after advancing 0.2 percent the prior month.
Prices for used cars and trucks rose 0.2 percent after
six consecutive months of declines. Airline fares rose for a fifth month
in a row.
Housing costs edged up, with owners' equivalent rent rising 0.2 percent.
(Additional reporting by Richard Leong in New York; Editing by Andrea Ricci)