US jobless claims down to seven-year low

New applications for US unemployment benefits were down to a seven-year low last week even as consumer prices saw their largest increase in 10 months in April, pointing to an economy on the mend.

There was more reason for cheer with other data today showing factory activity in New York state expanding at its quickest pace in nearly four years in May.

It conveyed the message of solid economic activity, the Christian Science Monitor, quoted Anthony Karydakis, chief economic strategist at Miller Tabak in New York as saying.

Labour conditions continued to improve and he expected this would be validated by payroll reports over the next few months, he added.

Initial claims for state unemployment benefits were down 24,000 to a seasonally adjusted 297,000, according to the labour department, offering fresh evidence the jobs market was strengthening.

This came as the lowest reading since May 2007 and brought claims back to their pre-recession level. According to projections of economists, first-time applications were expected to increase to 320,000 last week.

The department said in a second report that its Consumer Price Index was up 0.3 per cent last month as food prices increased a fourth consecutive month and the cost of gasoline surged.

Meanwhile, higher food and gas costs pushed up US consumer prices in April by the most in 10 months, evidence that inflation was rising from very low levels, The Seattle Times reported.

The consumer price index increased 0.3 per cent last month following a 0.2 per cent gain in March, the Labor Department said today. Over the past 12 months, prices had risen 2 per cent, the largest gain since July and matching the Federal Reserve's inflation target.

Excluding the volatile food and energy categories, core prices were up 0.2 per cent in April and had increased 1.8 per cent in the past 12 months.

Food prices surged 0.4 per cent for the third straight month, pushed by the largest increase in the cost of meat in 10 years. Gas prices increased 2.3 per cent, the first rise in four months.

The cost of fruits, vegetables and dairy products was also up following a drought in California and an excessively cold winter in the Midwest pushing up food prices this year.

Prices in other sectors too increased. Rents rose 0.3 per cent last month, so also did the prices of new and used cars. Air fares increased 2.6 per cent in April, the most in over four years, while the cost of clothes, furniture and haircuts remained unchanged.