WASHINGTON – The number of Americans filing for unemployment benefits fell to near a 43 year-low last week, pointing to further tightening in the labor market.
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Initial claims for state unemployment benefits dropped 28,000 to a seasonally adjusted 235,000 for the week ended Dec. 31, the Labor Department said on Thursday. That was close to the 233,000 touched in mid-November, which was the lowest level since November 1973.
Claims for the prior week were revised to show 2,000 fewer applications received than previously reported. But with claims data for six states and one territory estimated because of the New Year's holiday, last week's drop likely exaggerates the labor market's strength.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 5,750 to 256,750 last week.
Claims have now been below 300,000, a threshold associated with a healthy labor market, for 96 consecutive weeks. That is the longest stretch since 1970, when the labor market was much smaller.
The labor market is considered to be at or near full employment, with the jobless rate at a nine-year low of 4.6 percent. Tightening labor market conditions and gradually firming inflation allowed the Federal Reserve to raise its benchmark overnight interest rate last month by 25 basis points to a range of 0.50 percent to 0.75 percent.
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While the U.S. central bank forecast three rate hikes for 2017, minutes of the Dec. 13-14 policy meeting released on Wednesday suggested that the pace of increases would largely be determined by the labor market and fiscal policy.
Economists polled by Reuters had forecast first-time applications for jobless benefits falling to 260,000 in the latest week. Claims briefly pushed higher last month and in November, but economists blamed the gyrations on difficulties adjusting the data around moving holidays.
A Labor Department analyst said there were no special factors influencing last week's data. That data has no bearing on December's employment report, which is scheduled for release on Friday, as it falls outside the survey period.
According to a Reuters survey of economists, nonfarm payrolls likely increased by 178,000 jobs in December after the same gain in November.
Thursday's claims report also showed the number of people still receiving benefits after an initial week of aid rose 16,000 to 2.11 million in the week ended Dec. 24. The four-week average of the so-called continuing claims increased 26,250 to 2.07 million.
(Reporting by Lucia Mutikani; Editing by Paul Simao)