News

Jobless claims up, wage growth starting to push higher

Jobless claims up, wage growth starting to push higher

JOB MARKET: Initial claims for state unemployment benefits increased 23,000 to a seasonally adjusted 302,000 for the week ended July 26, the Labor Department said. Claims for the prior week were the lowest since May 2000. Photo: Reuters

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits rose last week, but the underlying trend pointed to a continuing strengthening of labor market conditions.

Other data on Thursday suggested a long-awaited acceleration in wage growth was imminent, with labor costs recording their largest increase in more than 5-1/2 years in the second quarter.

Initial claims for state unemployment benefits increased 23,000 to a seasonally adjusted 302,000 for the week ended July 26, the Labor Department said. Claims for the prior week were the lowest since May 2000.

“Unemployment claims have come down a lot as of late and suggest that labor market conditions continue to improve,” said Yelena Shulyatyeva, an economist at BNP Paribas in New York.

The four-week average of claims, considered a better gauge of labor market trends as it irons out week-to-week volatility, fell 3,500 to 297,250, the lowest level since April 2006.

Summer automobile plant shutdowns for retooling cause volatility in claims around this time of the year as automakers sometimes keep assembly lines running. This throws off a model the government uses to adjust the data for seasonal variations.

In another report, the Labor Department said the Employment Cost Index, the broadest measure of labor costs, rose 0.7 percent. That was the largest gain since the third quarter of 2008 and followed a 0.3 percent increase in the first quarter.

It is one of Federal Reserve Chair Janet Yellen’s favorite labor market gauges and is being closely watched for clues on the timing of the first interest rate increase from the U.S. central bank.

Growing anecdotal evidence of companies raising wages has left economists expecting the employment cost index to start rising significantly sometime in the second half of 2014.

Fed officials on Wednesday acknowledged the improvement in labor market conditions, but said “significant underutilization of labor resources” remained.

Economists had forecast the employment cost index increasing 0.5 percent in the second quarter. In the 12 months through June, labor costs rose 2.0 percent. They had advanced 1.8 percent in the 12 months through March.

Wages and salaries, which account for 70 percent of employment costs, increased 0.6 percent in the second quarter. That was the largest gain since the third quarter of 2008 and followed a 0.3 percent rise in the first quarter.

Wages and salaries were up 1.8 percent in the 12 months through June after rising 1.6 percent in the 12 months through March. Benefit costs jumped 1.0 percent in the April-June period, the largest increase since the second quarter of 2011, likely reflecting expanded health insurance coverage. Benefits had gained 0.4 percent in the first quarter. They increased 2.5 percent in the 12 months through June after rising 2.1 percent in the 12 months through March.

Despite the increase last week, claims remain at levels consistent with strong job growth. The data has no bearing on July’s nonfarm payrolls as it falls outside the survey window.

The government is expected to report on Friday that payrolls increased by 233,000 in July, according to a Reuters survey of economists.

While that would be a deceleration from June’s hefty gain of 288,000 jobs, it would mark the sixth straight month that employment has expanded by more than 200,000, a stretch last seen in 1997.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

Recent Headlines

in National

Amanda Knox murder conviction overturned

FILE - In this Jan. 31, 2014, file photo, Amanda Knox prepares to leave the set following a television interview in New York. Knox is engaged to Colin Sutherland, a musician who recently moved to Seattle from New York, a person close to the Knox family confirmed for The Associated Press. Knox’s murder conviction in the 2007 stabbing of her roommate has been reinstated by an Italian court, but the former college exchange student maintains her innocence and vows she won’t willingly go back to Italy. Both Knox and Sutherland are 27. No wedding date had been set.

Italy's highest court has overturned the murder conviction against Amanda Knox, bringing to a definitive end the high-profile case.

in National

Time for Iran to make tough decisions in nuclear talks

In this March 26, 2015, photo, Iranian Foreign Minister Mohammad Javad Zarif, center, leaves a meeting with U.S. Secretary of State John Kerry and other U.S. officials at a hotel in Lausanne, Switzerland. U.S. and Iranian diplomats gather at a Baroque palace in Europe, a historic nuclear agreement within reach. Over Iraq’s deserts, their militaries fight a common foe. Leaders in Washington and Tehran, capitals once a million miles from each other in ideological terms, wrestle for the first time in decades with the notion of a rapprochement.

Six world powers and Iran move closer to a deal, but there are still major disagreements.

in National

Making headlines this week

AP193442892434_0

A look at some of the week's biggest headlines and the stories you may have missed.

in Entertainment, National

Celebrities protest new Indiana law

George Takei poses for a portrait at Quaker Good Energy Lodge with GenArt and the Collective , during the Sundance Film Festival, on Saturday, Jan. 18, 2014 in Park City, Utah.

Celebrities call for an Indiana boycott after the passing of a controversial law that could lead to discrimination against gay couples.

in National

Senate’s Harry Reid will not seek re-election

Senate Minority Leader Harry Reid of Nev. adjusts his glasses as he speaks to reporters on Capitol Hill in Washington, Tuesday, March 24, 2015, following a policy luncheon. Reid is wearing special glasses as part of his recovery from injuries suffered in an exercise accident in January.

Senate Minority Leader Harry Reid says that it would be "inappropriate" for him to seek re-election.