The number of American workers applying for state unemployment insurance spiked to the highest level in six weeks, despite having recently dropped to the lowest total in over five years.
Initial claims for assistance soared 32,000 in the week ending May 11th to 360,000, eliciting concerns that the employment showdown seen in several forward looking indicators, though not in non-farm payrolls, may be working through to the labor market. Economists had forecast 330,000 new claims. The prior week's filings were revised up by 5,000 to 328,000.
The four week moving average, a more stable measure of employment trends, increased to 339,250 from 338,000, the lowest average since January 2008. The Labor Department in Washington D.C. did not have an explanation for the surge in unemployment claims.
Headline inflation dropped in April for the second straight month, the first time that has happened since a three month decline in the last quarter of 2008, in the throes of the financial crash.
The consumer price index skidded 0.4% in April, led by a fall in fuel prices, following a 0.2% drop in March, according to the Bureau of Labor Statistics. Economists had predicted a 0.3% decline. The core inflation rate, excluding price changes in food and energy, rose 0.1%, half the 0.2% forecast and the same as in March
Over the year prices rose at a 1.1% pace in April, the slowest pace since November 2010, down from the 1.5% rate in March and below the 1.3% median forecast. The core annual rate dropped to 1.7% in April from 1.9% prior. Economists had expected 1.8%. It was the lowest core inflation in over two years.
Housing starts sank 16.5% in April to an annual rate of 853,000 from 1.021 million in March. Analysts had predicted a 6.4% decline. It was the biggest one month drop since the 17.9% drop in February 2011. March was the first month with an annual rate over 1.0 million in five years. The ten year monthly average is 1.221 million; the twenty year average is 1.379 million.
Building permits rose 14.3% in April to a 1.017 annual rate. The prediction was for a 3.8% rise to 941,000 annually. It was the first million plus month in permits since June 2008. The monthly average over the last decade is 1.259 million, over last two decades it is 1.393 million.
Chief Market Strategist