New U.S. claims for unemployment benefits rose more than expected last week, according to a government report on Thursday that suggested hiring in August was steady but not robust.
U.S. July CPI rose 0.5 pct
U.S. consumer prices rose faster than expected in July as gasoline rebounded sharply, but a moderation in underlying price pressures backed the Federal Reserve's view of a low inflation environment.
BRIAN JONES, SENIOR ECONOMIST, SOCIETE GENERALE, NEW YORK
JOBLESS CLAIMS: When you look at the four-week moving average, it suggests a pickup in the next payrolls report.
LINDSEY PIEGZA, ECONOMIST, FTN FINANCIAL, NEW YORK
Much larger than expected increase in the headline report, a good portion coming from the usual suspect: energy -- gasoline up nearly 5 percent after falling for two consecutive months.
The OER ticked up to 0.3 -- that is a larger than expected increase in what we look at as essentially a proxy for the cost of owning a home. It ticked up more than the usual we see on a monthly basis.
There was some widespread price increases throughout food, apparel, medical care. That suggests that price pressures have moved beyond food and energy which is a little concerning but the year over year rate remains pretty much in line.
So right now there is not a tremendous amount of fear, certainly not enough upward pressure to suggest that the Fed would be willing to change their policy.
AVERY SHENFELD, ECONOMIST, CIBC WORLD MARKETS ECONOMICS,
Core was better behaved, and in any event, inflation is not the pressing issue these days. Initial claims were a bit higher than expected, ticking up marginally to 408,000, indicating a generally sluggish trend for hiring although still better than where we stood during the second quarter.
OMER ESINER, SENIOR MARKET ANALYST, COMMONWEALTH FOREIGN
When you look at the big picture this week, we see hotter-than-expected CPI and PPI. I don't think we're at a point yet where we are becoming concerned about inflation. But it does suggest the Fed may have a more difficult time making a case for QE3, especially in the current political environment. So on the margin, I think it's positive for the dollar and may slightly reduce the risk of a signal of QE3 next week.
PAUL BALLEW, CHIEF ECONOMIST, NATIONWIDE INSURANCE, COLUMBUS,
ON JOBLESS CLAIMS:
We've been bouncing around the 400 level for really the last few weeks. It once again tells us the job market is relatively tepid... It's consistent with an economy at 2 percent growth. It's hard to see stronger job gains...We'd like to see them in the low to mid 300s.
The headline number was a little stronger. If you look at the core, it was pretty close to our expectations. There's a little bit of price pressure from categories in the market place. It complicates things for the Fed and adds a degree of challenge on top of all of the other challenges.
Everyone wants to debate QE3, economically and politically... I think the Fed has a really difficult hand to play right now... in terms of healing this balance sheet recession.
PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK + CO, NEW YORK
Encouragingly, the pace of firing is moderating to near the lowest since summer of '08 but the level of hiring, of course, remains still at a sluggish pace and well below what is needed to put a real dent in the unemployment rate.
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON
The number is above market expectations for a 400k outcome, but the rise is not sufficient to conclude that a recent improvement in trend is fading as a consequence of recent financial turmoil. The 4 week average of 402.5k is the lowest since April 16, a month when payroll growth was robust.
The blame for the upside surprise comes largely from positive seasonal adjustments in gasoline, though food and energy services with 0.4% gains also both exceeded the core rate which came in on consensus at +0.2%. With the core up by 0.2245% before rounding it remains the case that core CPI has accelerated in 2011 to date, though after a third straight strong gain in apparel we may be due for a correction lower there.