US jobless claims rise while retail sales in April grow on higher gasoline prices

US unemployment claims rose moderately last week but were still within acceptable limits as businesses refrained from executing mass-level layoffs even as they grappled with mounting inflationary pressures.

Initial claims for state unemployment benefits increased by 12,000 to a seasonally adjusted 211,000 in the week ended May 9, according to data released Thursday by the Labor Department.

Economists polled by Reuters had forecast 205,000 new claims.

The increase comes as concerns grow that rising prices and supply shortages could eventually weigh more heavily on hiring and business activity across parts of the economy.

The insured unemployment rate, which measures the share of the workforce receiving benefits, rose to 1.2% in the week ended May 2 from 1.1% previously.

Meanwhile, continuing claims, viewed as a gauge of hiring conditions, increased by 24,000 to 1.782 million, suggesting unemployed workers may be finding it more difficult to secure new jobs.

Inflation pressures intensify

The latest labor market figures arrive amid worsening inflation concerns fueled largely by higher energy prices and shipping disruptions in the Strait of Hormuz following the US-Israel conflict with Iran.

The disruption has strained global trade flows and pushed up prices for a range of commodities, including fertilizers, petrochemicals and aluminum.

Data released Wednesday showed US producer prices posted their largest monthly increase in four years during April, reinforcing concerns that inflationary pressures are becoming more entrenched.

The Federal Reserve is closely monitoring whether higher energy costs begin feeding more broadly into wages, manufacturing and consumer prices.

Despite the rise in unemployment claims, the labor market has remained relatively resilient so far.

Government data released last week showed nonfarm payrolls increased by 115,000 jobs in April, marking a second consecutive month of solid employment gains.

The unemployment rate held steady at 4.3%.

Retail sales rise in April driven by higher gasoline prices

Separate data released Thursday showed retail sales rose for a third straight month in April, though much of the increase reflected higher gasoline prices rather than stronger consumer demand.

Retail sales climbed 0.5% last month, matching Wall Street expectations.

Gas station sales surged 2.8% as the Iran conflict drove fuel prices sharply higher.

Excluding gasoline stations, retail sales rose a more modest 0.3%, indicating underlying consumer spending remained softer.

Consumer prices increased 0.6% in April, suggesting many households received less purchasing power despite spending more overall.

Economists warned that persistently high fuel costs and stubborn inflation could weaken consumer demand heading into the summer months.

Consumer spending remains the largest driver of US economic growth, making any slowdown closely watched by policymakers and investors.

Trade prices hit multi-year highs

Additional data Thursday pointed to broadening inflation pressures in global trade.

Import prices jumped 1.9% in April from the previous month, well above economists’ forecasts for a 0.9% increase and marking the largest annual gain since October 2022.

On a year-over-year basis, import prices rose 4.2%.

The increase was driven heavily by energy-related products.

Prices for fuels and lubricants surged 16.3%, while petroleum and petroleum product prices climbed 19%.

Nonfuel imports also increased 0.8%, reflecting higher prices for capital goods, industrial supplies and food products.

Export prices rose even more sharply, climbing 3.3% in April.

Annual export price inflation accelerated to 8.8%, the highest since September 2022.

The latest data underscores growing concerns that elevated energy costs and supply disruptions linked to geopolitical tensions could continue feeding inflation across the US economy while complicating the Federal Reserve’s efforts to maintain steady growth and stable employment.