WASHINGTON/NEW YORK, Fri Mar 16, 2012 — Economic growth showed signs of becoming more self-sustaining as the number of Americans claiming new jobless benefits fell back to a four-year low last week and manufacturing activity in the Northeast picked up this month.
But the impact of higher oil prices also was starting to be seen in data on Thursday. Producer prices racked up their biggest increase in five months in February, while manufacturers in New York state reported a surge in input costs in March.
The recent gains in oil and gasoline prices have raised concerns the higher costs could start to squeeze businesses and consumers and put a dent in the recovery.
Still, producer prices last month did not rise as much as economists had expected, and underlying inflation pressures were contained.
Thursday’s initial claims data for state unemployment benefits was further evidence of an improving labor market after the jobless rate held at a three-year low of 8.3 percent in February.
“This suggests that the recovery is firmly on track,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
The Federal Reserve earlier this week acknowledged the recent improvement in the labor market, but remained concerned with the still-high unemployment rate. The central bank also reiterated its expectation it will keep interest rates at ultra-low levels through late-2014 as part of its efforts to support the economy.