US labor market resilient; inflation hotter in fourth quarter

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France Dernières Nouvelles,France Actualités

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to a persistently tight labor market, and further fueling fears that the Federal Reserve could raise interest rates higher than anticipated.

was much stronger than initially thought in the fourth quarter, which raises the risk of higher readings when the government publishes January's personal consumption expenditures price data on Friday.

Initial claims for state unemployment benefits decreased by 3,000 to a seasonally adjusted 192,000 for the week ended Feb. 18, the Labor Department said. Economists polled by Reuters had forecast 200,000 claims for the latest week. Claims have been hemmed in a tight 183,000-206,000 range this year, and run consistently low despite high-profile layoffs in the technology sector and interest-rate sensitive industries, which economists and policymakers have argued were not representative of the overall economy.

Economists expect strong employment growth in February, though the pace probably slowed from last month's eye-popping 517,000 jobs. Data next week on the number of people receiving benefits after an initial week of aid will cast more light on the state of the labor market in February. The PCE price index accelerated at a 3.7% pace, revised up from the previously estimated 3.2% pace. Excluding food and energy, the core PCE price index rose at a 4.3% rate, an upward revision of 0.4 percentage point. The PCE price indexes are the Fed's preferred inflation measures.

Personal income increased $388.1 billion last quarter, revised up $77.1 billion. Wages and salaries growth in the third quarter was much stronger than previously reported.

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In other words, the economy is still on fire, inflation notwithstanding.

France Dernières Nouvelles, France Actualités

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