US jobless claims drop to near 45-year low
February 08 2018 10:15 PM
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A New York Department of City Administrative Services representative (left) speaks with job seekers during a Catalyst Career Group job fair in New York on Wednesday. Initial claims for state unemployment benefits decreased 9,000 to a seasonally adjusted 221,000 for the week ended February 3, the Labour Department said yesterday.

Reuters/Washington

The number of Americans filing for unemployment benefits unexpectedly fell last week, dropping to its lowest level in nearly 45 years as the labour market tightened further, bolstering expectations of faster wage growth this year.
The second straight weekly decline in claims reported by the Labour Department yesterday also pointed to strong job growth momentum, which could further drive the unemployment rate lower.
“The extremely low level of claims is a sign of tightness in the labour market and suggests that February is shaping up to be another solid month for job creation,” said John Ryding, chief economist at RDQ Economics in New York.
Initial claims for state unemployment benefits decreased 9,000 to a seasonally adjusted 221,000 for the week ended February 3, the Labour Department said.
Claims fell to 216,000 in mid-January, which was the lowest level since January 1973.
Economists polled by Reuters had forecast claims rising to 232,000 in the latest week.
Last week marked the 153rd straight week that claims remained below the 300,000 threshold, which is associated with a strong labour market.
That is the longest such stretch since 1970, when the labour market was much smaller.
The labour market is near full employment, with the jobless rate at a 17-year low of 4.1%. The tighter labour market is starting to exert upward pressure on wage growth.
The Labour Department reported last week that average hourly earnings jumped 2.9% year-on-year in January, the largest gain since June 2009, after advancing 2.7% in December.
Employers added 200,000 jobs to their payrolls last month.
Strong wage growth supports optimism among Federal Reserve officials that inflation will increase toward the US central bank’s 2% target this year.
US financial markets expect the Fed will raise interest rates in March.
The Fed has forecast three rate increases for this year after lifting borrowing costs three times in 2017.
Prices for US Treasuries fell, with the yield on the benchmark 10-year note rising to a near four-year high also as the Bank of England said interest rates probably need to rise sooner.
The dollar was little changed against a basket of currencies.
Stocks on Wall Street were trading lower.
“For Fed officials it is damn the torpedoes and plunging stock prices and keep with the game plan to raise rates gradually as the economy is showing increasing signs of overheating,” said Chris Rupkey, chief economist at MUFG in New York. “The Fed may be out of step with current economic conditions and behind the curve.”
Last week, the four-week moving average of initial claims, considered a better measure of labour market trends as it irons out week-to-week volatility, declined 10,000 to 224,500, the lowest level since March 1973.
The claims report also showed the number of people receiving benefits after an initial week of aid fell 33,000 to 1.92mn in the week ended January 27.
The four-week moving average of the so-called continuing claims rose 12,500 to 1.95mn.



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