WASHINGTON -- The number of people seeking U.S. unemployment benefits rose last week, but to a low level that indicates employers are still cutting relatively few jobs.
Weekly applications rose 13,000 to a seasonally adjusted 277,000, the highest in four weeks. The less volatile four-week average declined slightly to 269,250.
"The message from [unemployment] claims continues to be that the April/May payrolls data greatly exaggerated the extent to which the trend in employment growth is weakening," Jim O'Sullivan, chief U.S. economist at High Frequency Economics Ltd., wrote in a note to clients.
Applications are a proxy for layoffs and have remained below 300,000 for 67 straight weeks, the longest such streak since 1973.
A total of 2.15 million Americans are receiving benefits, 4 percent lower than a year ago.
The figures are a reassuring sign that the job market may be healthier than other recent data suggests. Businesses cut back sharply on hiring in April and May. Employers have added an average of only 116,000 jobs in the past three months, half last year's average of 230,000.
Yet the low level of applications for unemployment aid is a sign that companies aren't laying off workers.
And fewer applications are also consistent with steady hiring over time, according to research by Michael Feroli, an economist at JPMorgan Chase. Applications tend to decline when workers who lose their jobs can more quickly find a new one.
The economy slowed to a crawl in the first three months of this year, which correlates to slower hiring. Growth was 0.8 percent at an annual rate in the first quarter.
But most data since then suggest growth picked up in the April-June quarter. Americans have stepped up their spending at retail stores and restaurants in the past two months. Home sales and construction have also improved. Economists now forecast growth will pick up to a 2.5 percent pace in the second quarter.
The pace of growth in consumer prices slowed last month as food costs fell, but annual core inflation inched up, the Labor Department said Thursday. The consumer price index, a broad measure of the cost of a variety of household purchases, increased 0.2 percent in May.
The figure was down from 0.4 percent the previous month, which was the biggest jump in more than three years.
Despite the slowdown, prices were up for the third month in a row. It signaled that inflation is firming after prices declined over the winter.
Moderate price growth is important for the economy, and the modest upward inflation trend could help push Federal Reserve policymakers to increase their benchmark short-term interest rate in the coming months, some analysts said.
"Inflation is on track to continue to rise toward the Fed's 2 percent target," said Tom Simons, a money-market economist at Jefferies LLC in New York. "It's not going to be a rapid process though. The core will continue to be supported by housing."
Food prices declined 0.2 percent in May, after a 0.2 percent increase the previous month. That offset a 2.3 percent rise in gasoline prices and a 0.5 percent increase in health care costs.
Falling gasoline prices have helped keep inflation low over the past two years, but prices at the pump have been rising recently.
Excluding often volatile energy and food, core prices rose 0.2 percent in May, the same pace as the previous month.
For the 12 months ending May 31, core prices increased 2.2 percent. That annual pace was up from 2.1 percent for the 12 months ended April 30.
A Paris-based international group on Thursday said U.S. economic expansion, celebrating its seventh birthday this month, should remain on track over the next two years with growth strengthening in 2017.
The 34-nation Organization for Economic Cooperation and Development is projecting that U.S. growth, as measured by the gross domestic product, will slow this year to 1.8 percent but accelerate slightly in 2017 to 2.2 percent.
The organization puts the risks of a U.S. recession as a "low-probability prospect" but it does point to a number of long-term challenges facing the country. It recommends well-designed investments in innovation, infrastructure and improving job skills as a way to combat a prolonged period of weak growth in worker productivity.
The group's annual report on the United States was released Thursday in Washington.
Information for this article was contributed by Christopher S. Rugaber and Martin Crutsinger of The Associated Press, by Jim Puzzanghera of the Los Angeles Times and by Shobhana Chandra and Victoria Stilwell of Bloomberg News.
Business on 06/17/2016