WASHINGTON – The number of Americans filing for unemployment benefits fell from a five-month high last week, pointing to labor strength that underscores the economy's sustained momentum.
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A tight labor market together with signs of a strengthening economy and steadily rising inflation will likely push the Federal Reserve to hike interest rates next week.
Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 258,000 for the week ended Dec. 3, the Labor Department said on Thursday. Claims for the prior week were unrevised.
It was the 92nd straight week that claims were below 300,000, a threshold associated with a healthy labor market.��That is the longest stretch since 1970, when the labor market was much smaller.
U.S. financial markets were largely unmoved by the data as investors focused on the European Central Bank's unexpected decision to cut its asset purchases starting in April.
Prices for U.S. government debt were trading lower, while U.S. stock index futures were higher. The U.S. dollar was stronger against a basket of currencies.
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Last week's drop in first-time applications for jobless benefits was in line with economists' expectations. Claims hit a 43-year low in mid-November.
Economists had dismissed the recent back-to-back increases in filings, which had pushed claims to a five-month high, as an aberration. Claims tend to be volatile around this time of the year because of different timings of the Thanksgiving holiday.
A Labor Department analyst said there were no special factors influencing last week's data and that no states had been estimated. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 1,000 to 252,500 last week.
The labor market is near full employment, with the government reporting last week that the unemployment rate fell to a nine-year low of 4.6 percent in November amid solid increases in nonfarm payrolls.
The Fed's policy-setting committee meets next Tuesday and Wednesday. Economists expect the U.S. central bank to increase borrowing costs by at least 25 basis points at that meeting. The Fed raised its benchmark overnight interest rate last December for the first time in nearly a decade.
Thursday's claims report also showed the number of people still receiving benefits after an initial week of aid fell 79,000 to 2.01 million in the week ended Nov. 26. That followed two straight weekly increases.
The four-week average of the so-called continuing claims slipped 9,500 to 2.03 million.
(Reporting by Lucia Mutikani; Editing by Paul Simao)