Surprise drop in US jobless claims as labour market tightens

WASHINGTON • The number of Americans filing for unemployment benefits unexpectedly declined last week to a three-month low, signalling durability in the labour market.

Initial jobless claims dropped by 7,000 to 262,000 in the week ended Feb 13, the lowest since Nov 21, a report from the Labour Department showed yesterday. Last week coincided with the period that the government surveys businesses and households to calculate February's payrolls and jobless rate.

The labour market has exhibited persistent strength despite softer foreign sales, a sign that domestic demand is helping the US weather a global slowdown.

More hiring and fewer firings that lead to enhanced feelings of job security have the potential to encourage an acceleration in consumer spending.

Mr Millan Mulraine, deputy head of US research and strategy at TD Securities in New York, said: "Even though it gives us only one side of the labour-market ledger, jobless claims are effectively a gauge on overall business sentiment."

The report is "a good indication that businesses are more inclined to hold on to what they have and add to that, as opposed to reduce their payrolls."

The median forecast in a Bloomberg survey called for 275,000 claims after 269,000 a week earlier. Estimates ranged from 255,000 to 285,000. The four-week average of claims, a less volatile measure than the weekly figures, decreased to 273,250, the lowest since Dec 19, from 281,250.

The latest figure compares with an average of 285,250 during the comparable employment survey period for January. The economy added 151,000 workers in January, the fewest in four months.

The number of people continuing to receive jobless benefits rose by 30,000 to 2.27 million in the week ended Feb 6. The unemployment rate among people eligible for benefits climbed to 1.7 per cent from 1.6 per cent. These data are reported with a one-week lag.

Initial jobless claims reflect weekly firings, and a sustained low level of applications has typically coincided with faster job gains. Layoffs can also reflect company- or industry- specific causes, such as cost-cutting or business restructuring.

Beginning in March of last year, claims have remained below the 300,000 level that economists indicate is consistent with a healthy labour market.

Still, the four-week moving average has climbed steadily since reaching a 42-year low in October, around the same time growth began to slow the world's biggest economy.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on February 19, 2016, with the headline 'Surprise drop in US jobless claims as labour market tightens'. Print Edition | Subscribe