Applications for Jobless Benefits Drop to a 49-year Low, Inflation Remains Tame

The number of people seeking unemployment benefits in the United States fell last week to its lowest level since December 1969, the Labor Department said Thursday.

The last time unemployment benefits claims were this low, Jay-Z was a newborn in a New York City hospital, the Boeing 747 had just made its first commercial passenger flight, and the Rolling Stones were about to headline the ill-fated outdoor concert at the Altamont Speedway in California, later blamed for ending the Woodstock-era of good feelings.

According to the Labor Department, weekly applications for unemployment aid fell 10,000 to a seasonally adjusted 202,000.

Unemployment applications are considered a proxy for layoffs, so the drop to such a low number indicates that companies are cutting very few workers.

A report Wednesday from payroll processor ADP found that businesses added just 129,000 jobs in March, down from 197,000 the previous month. The federal government’s count for March is scheduled to be released Friday.

“March posted the slowest employment increase in 18 months,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Although some service sectors showed continued strength, we saw weakness in the goods producing sector.”

Mark Zandi, chief economist of Moody’s Analytics, was equally concerned.

“The job market is weakening, with employment gains slowing significantly across most industries and company sizes,” Zandi said. “Businesses are hiring cautiously as the economy is struggling with fading fiscal stimulus, the trade uncertainty, and the lagged impact of Fed tightening. If employment growth weakens much further, unemployment will begin to rise.”

In other economic news, the Bureau of Labor Statistics said Thursday that producer prices increased by the most in five months in March, but underlying wholesale inflation remains low.

The department said its producer price index rose 0.6 percent last month, lifted primarily by a 0.4 percent surge in the cost of gasoline. That was the largest increase since last October.

It also followed a much more modest 0.1 percent gain in February.

In the 12 months from March 2018 to March 2019, the producer price index  rose 2.2 percent after advancing 1.9 percent in February.

A key gauge of underlying producer price pressures that excludes food, energy and trade services was unchanged in March after ticking up 0.1 percent in February.

The so-called core producer price index increased 2.0 percent in the 12 months through March.

That was the smallest annual increase since August 2017 and followed a 2.3 percent rise in February.

Growth has slowed since it topped 4 percent at an annual rate in the April-June quarter of last year, decelerating to just 2.2 percent in the final three months of 2018.

The Federal Reserve has said once all the numbers for the quarter are crunched, it expects to find the U.S. economy expanded at a rate of 2.1 percent in the first three months of this year.