Consumer prices, jobless claims rise

Associated Press

WASHINGTON

Consumers paid more for a range of goods and services last month, and unemployment-benefit applications jumped last week to the highest level in three months. The latest data offered a picture of an economy facing inflationary pressures and a depressed job market.

The Consumer Price Index rose 0.4 percent in August, the Labor Department said Thursday. That followed a 0.5 percent increase in July. Excluding volatile food and energy costs, core prices increased 0.2 percent.

Prices for food, energy apartment rents and clothing all increased.

Separately, the Labor Department said applications for unemployment benefits rose 11,000 to 428,000 last week. The four-week average, a less-volatile measure, rose for the fourth-straight week to 419,500, the highest level in eight weeks.

Applications need to fall below 375,000 to indicate that hiring is increasing enough to lower the unemployment rate. They haven’t been below that level since February.

“One bad week means nothing, but claims have been nudging higher since ... early August. We await the next few weeks’ numbers with interest, and a degree of trepidation,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics.

A third report from the Federal Reserve said manufacturing was mostly weak outside of strong auto production. Factory output rose 0.5 percent in August, after increasing 0.6 percent in July.

Most of the gain came from a 2.6 percent increase from autos and related products. The second-straight month of increases in auto production was evidence that supply-chain disruptions stemming from the Japan earthquake are easing.

The data suggest the economy isn’t improving much after it barely grew in the first six months of the year and employers pulled back on hiring.

At the same time, consumers are being hit with higher prices for basic necessities. That has reduced their purchasing power, cut into their ability to spend on other items and weakened the economy further.