New US claims for unemployment benefits rose more than expected last week while unit labour costs fell in the third quarter, underlining the persistent weakness in the jobs market.
Although other data today showed non-farm productivity rebounded at a much stronger-than-expected 1.9 per cent annual rate in the third quarter, the general tone remained consistent with a sluggish economy.
Initial claims for state unemployment benefits increased 20,000 to a seasonally adjusted 457,000, the Labor Department said, reversing the prior week's decline.
In a second report, the department said unit labour costs, a gauge of potential inflation pressures closely watched by the Federal Reserve, fell at a 0.1 per cent rate after rising a revised 1.3 per cent in the second quarter.
Concerns about the lacklustre recovery and stubbornly high unemployment prompted the Federal Reserve yesterday to announce it would buy an additional $600 billion worth of government bonds by the middle of next year.
The second round of asset purchases is intended to push interest rates further down, thereby stimulating domestic demand, and prevent the current low inflation environment from spiraling into a damaging bout of deflation.
The claims data has little influence on October's employment report due tomorrow as it falls outside the survey period. The government is expected to report that nonfarm payrolls increased 60,000 last month, which would be the first expansion since May, after dropping 95,000 in September.
A Labor Department official said there was nothing unusual in the claims data and described the report as fairly clean.
The four-week average of new jobless claims, considered a better measure of underlying labor market trends, rose 2,000 to 456,000.
The rise in productivity in the third quarter, which exceeded economists expectations for a 1.0 per cent growth pace, implied little need for businesses to step up hiring.
However, economists say at some point firms will no longer be able to meet demand by making their operations more efficient and will need to increase payrolls.
During the third quarter, hours worked increased at a slower 1.1 per cent rate after a 3.5 per cent pace in the second quarter.
Reuters