WASHINGTON - The number of workers filing new applications for unemployment benefits fell less than expected last week, while consumer prices were unchanged in February on lower energy prices.
The data on Thursday pointed to a gradual improvement in the labor market and generally muted inflation pressures, which should allow the Federal Reserve to honor its commitment to keep its benchmark interest rate ultra low for a while.
The jobless claims number shows the labor market continues to stabilize, however there is very little if any price pressure in the U.S., which would allow the Fed to leave interest rates low for some time, said John Doyle, a foreign exchange strategist at Tempus Consulting, in Washington.
Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 457,000 in the week ended March 13, the Labor Department said. Analysts had expected claims to slip to 455,000.
The data covered the survey period for the government's closely watched employment report for March, which will be released April 2.
In another report, the department said the Consumer Price Index was flat after rising 0.2 percent in January. Excluding volatile energy and food prices, the closely watched core measure of consumer inflation inched up 0.1 percent after falling 0.1 percent in January.
Analysts polled by Reuters had forecast overall consumer prices rising 0.1 percent in February. Compared to February last year, prices rose 2.1 percent.
Stock index futures were little changed after the data, while U.S. Treasury debt prices rallied. The U.S. dollar fell against the yen and euro.
A government report on Wednesday showed muted inflation pressures at the wholesale level. The U.S. central bank this week renewed a promise to keep its benchmark interest rate exceptionally low for an extended period, citing a moderate economic recovery and low rates of resource utilization.
LABOR MARKET SLACK
The four-week moving average of new claims, which irons out week-to-week volatility, fell 4,250 to 471,250, the department said.
Both initial claims and the four-week average have been stuck at elevated levels after falling rapidly in the second half of last year, an indication that any improvement in the labor market will only be gradual.
Analysts argue that both have to fall below 450,000 to signal sustainable private payrolls growth.
However, they still expect the economy to show job growth in March, led by temporary hiring for the 2010 census. About 8.4 million jobs have been lost since the start of the recession in December 2007.
With the labor market still weak, inflation pressures will likely remain muted.
Last month, energy costs fell 0.5 percent, the biggest drop since April, after surging 2.8 percent in January, the department said. Gasoline prices declined 1.4 percent, the largest fall since March, partially unwinding January's 4.4 percent surge. Food prices edged up 0.1 percent in February after rising 0.2 percent.
Core prices were bumped up last month by rising costs for vehicles and medical care. Medical care costs rose 0.8 percent for the second straight month.
The gain in core prices was, however, limited by shelter costs, which were unchanged, as well as a 0.7 percent drop in apparel. The decline in apparel prices was the biggest since October 2008.
Compared to February last year, the core inflation rate rose 1.3 percent, slowing from a 1.6 percent year-on-year increase in January. Analysts had expected core prices to rise 1.4 percent year-on-year. (Reporting by Lucia Mutikani; Editing by Neil Stempleman)