The number of U.S. workers filing new applications for unemployment insurance fell slightly less than expected last week. The Labor Department said initial claims dropped 7,000 to 444,000. Continuing claims dropped 59,000 to 4.59 million, in line with expectations. The report has been showing little change recently. We will get better insight in labor conditions with tomorrow’s employment situation report. Economists are calling for an increase of 200,000 jobs.
A separate report showed productivity growth slowed in the first quarter, suggesting businesses will need to raise employment to boost output. The Labor Department said non-farm productivity rose at a 3.6% annual rate in the first quarter after a 6.3% surge in the final quarter of 2009. Productivity has expanded rapidly in the previous three quarters, but firms have been reluctant to hire new workers, opting instead to increase working hours. Meanwhile, labor costs were smaller than the previous quarter, indicating muted inflation pressures which bodes well for the Fed to keep rates low.
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