- Raymond Stone, managing director at Stone & McCarthy Research Associates in Princeton
American unemployment claims unexpectedly dropped 1,000 to 264,000 in the week, below expectations of 272,000. Lower level of jobless claims showed that staffing remains stable and lower economic growth was due to worse weather conditions, stronger Dollar and port dispute. For ten consecutive weeks jobless claims remained below 300,000. Furthermore, the average number of claims during last four weeks pulled down to 271,750, the lowest level since April 2000, while unemployment rate declined to 5.4%, marking the lowest level in seven years. Meanwhile, the number of people receiving benefits remained 2.23 million. The very low levels of unemployment benefit applications is a reassuring sign that employers are not cutting staff, even though economic growth has faltered this year. Growth is looking sluggish in the second quarter as well, as consumers spent cautiously in April. Some economists forecast growth may be just an annualized 2% in the April-June quarter. Most still expect growth will accelerate from that level in the second half of the year.
Elsewhere, the US PPI, a bellwether of consumer inflation, sank more-than-expected to -0.4% in April, down from 0.2% in March, while analysts had forecasted a 0.1% gain amid plunged retailers and wholesalers profit margins. Some 70% of the decrease in PPI was due to a 0.7% fall in final demand goods and a 0.1% decline in final demand service.
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