Jobless Claims And Import Prices Show Notable Increases 
Thursday, April 12, 2007 9:09:53 AM - Thursday morning, the Department of Labor released two key economic reports, showing an unexpected increase in weekly jobless claims as well as a sharp rise in import prices. The data may raise some concerns about the outlook for the economy and inflation.
The Labor Department’s report on initial jobless claims in the week ended April 7 showed that jobless claims rose to 342,000 from the previous week’s revised figure of 323,000. With the increase, jobless claims rose to their highest level since the week ended February 10.
The increase came as surprise to economists, who had been expecting jobless claims to edge down to 320,000 compared to the 321,000 originally reported for the previous week.
The report also showed that the less volatile four-week moving average rose to 323,250 from the previous week’s revised average of 316,250.
The data may offset some of the optimism about that labor market that was generated by last week’s March employment report, which showed that the unemployment rate unexpectedly matched a five-year low of 4.4 percent.
As mentioned above, a separate report from the Labor Department showed that import prices surged up 1.7 percent in March after a downwardly revised 0.1 percent increase in February. This marks the biggest increase in import prices since May of 2006, when prices rose 1.8 percent.
The increase in import prices was largely due to a sharp rise in prices for petroleum imports, which rose 9.0 percent in March following a downwardly revised 0.6 percent increase in the previous month.
With the increase in March, import prices rose at an annual rate of 2.8 percent, while prices for petroleum imports were up 2.4 percent year-over-year. Excluding prices for petroleum imports, import prices increased by a much more modest 0.3 percent in March compared to a 0.1 percent increase in February. Prices for non-petroleum imports rose at an annual rate of 2.9 percent.
The report also showed that export prices rose 0.7 percent in March, matching the increase that was seen in the previous month. The increase in export prices was due in large part to a 2.1 percent increase in agricultural export prices.
The Labor Department said that prices for non-agricultural exports rose 0.6 percent in March following a 0.5 percent increase in February.
On an annual basis, export prices were up 5.3 percent in March due in part to a 20.2 percent year-over-year increase in prices for agricultural export. Prices for non-agricultural exports rose at an annual rate of 4.2 percent in March.
The notable increase in import prices may add to some of the recent concerns about inflation after the minutes of the March Federal Reserve meeting showed that inflation remains the Fed members’ predominant policy concern.
The Fed is scheduled to make its next decision on interest rates after a meeting on May 9. Key inflation data that is due to be released this Friday and next Tuesday could have a significant impact on expectations for the next meeting.