Data points to firmer labor market, inflation still tame

Thu Jan 16, 2014 11:35am EST
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By Lucia Mutikani

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits fell for the second consecutive week last week, suggesting a sharp step-down in job growth in December was likely to be temporary.

The better labor market tone was also captured by a survey on Thursday showing an acceleration in manufacturing activity in

the Mid-Atlantic region, accompanied by a rise in factory jobs.

Even as the economy gathers steam there is little sign of a broad pick-up in prices, keeping inflation pressures muted.

"The outlook for 2014 remains good. The economy is not generating much inflation at the moment, but this is no reason to doubt its vitality," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.

Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 326,000, the Labor Department said. That compared to economists' expectations for a fall to 328,000.

Job growth slowed sharply in December, with employers adding only 74,000 new jobs to their payrolls. Nonfarm payrolls had increased 241,000 in November and the retreat last month was blamed on cold weather.

In a separate report, the Philadelphia Federal Reserve Bank said its business activity index rose to 9.4 points this month from 6.4 in December. Any reading above zero indicates manufacturing expansion in the region, which includes factories in eastern Pennsylvania, southern New Jersey and Delaware.   Continued...

Job seekers listen to a presentation at the Colorado Hospital Association health care career fair in Denver April 9, 2013. REUTERS/Rick Wilking