Plenty of economic data were released on Thursday morning. Little of it was good.
Eleven thousand new claims for unemployment benefits were filed last week, bringing the total to 428,000, according to the Labor Department. Economists had actually expected claims to fall to 410,000 from last week’s initially reported 414,000, Reuters reported.
The four-week moving average, a more stable gauge of labor-market health, rose to 419,500, an increase of 4,000 from the previous week. Economists say that claims must fall—and remain—below 400,000 to dent unemployment.
And then there's the cost of living. The Consumer Price Index, which measures the change in the prices of goods and services, rose 0.4 percent in August, according to a separate report by the Labor Department.
Over the past year, prices increased 3.8 percent before seasonal adjustment. Rising gasoline, food, shelter, and clothing prices all contributed to the seasonally adjusted increase in the index.
But the core CPI, which excludes volatile food and energy prices, rose by a more moderate 0.2 percent, in line with economists’ expectations. The core index grew by 2 percent over the year, at the top of the Federal Reserve's informal target for inflation.
Deutsche Bank analysts cautioned that the Fed may face a difficult choice if core inflation continues to grow at this pace. Many policymakers will wish to address the slowdown in economic growth but could face criticism for unduly fueling inflation if they do so by enlarging the central bank’s balance sheet. As a result, analysts expect the Fed to provide further accommodation without expanding the balance sheet outright through actions such as maturity extension, a shift in the bank's portfolio to longer-term securities.
Fed Chairman Ben Bernanke, delivering opening remarks at a central bank conference on systemic risk on Thursday morning, did not comment on possible Fed action. The policy-setting Federal Open Market Committee is set to convene early next week to discuss its options.
Another report released on Thursday indicated that manufacturing activity in New York contracted for the fourth month in a row, heightening fears that the manufacturing sector will continue its weak performance through the third quarter. A similar report from the Philadelphia Fed showed that regional manfuacturing activity is continuing to contract, but at a less dramatic rate than in August. And industrial production rose just 0.2 percent in August, down from an increase of 0.9 percent in July, according to data released by the Fed on Thursday.
Despite the negative data, U.S. stocks climbed in early Thursday trading after five major central banks, including the Federal Reserve, announced they would join forces to ease funding pressure on European banks by providing dollar liquidity.