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US jobless claims drop to near 45-year low; weekly jobless claims fall 9k

The tighter labour market is starting to exert upward pressure on wage growth

Reuters  |  Washington 

US workers
Photo: Reuters

The number of Americans filing for unemployment benefits unexpectedly fell last week, dropping to its lowest level in nearly 45 years as the tightened further, bolstering expectations of faster wage growth this year.

Initial claims for state unemployment benefits decreased 9,000 to a seasonally adjusted 221,000 for the week ended February 3, the Labor Department said on Thursday. 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 thresholds, which is associated with a strong That is the longest such stretch since 1970, when the was much smaller.

The is near full employment, with the rate at a 17-year low of 4.1 per cent. The tighter is starting to exert upward pressure on wage growth.

The Labor Department reported last week that average hourly earnings jumped 2.9 per cent year-on-year in January, the largest gain since June 2009, after advancing 2.7 per cent in December.

Strong wage growth supports optimism among Federal Reserve officials that inflation will increase toward the US central bank's 2 per cent 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, but much will depend on the inflation outlook and financial conditions. The central bank lifted borrowing costs three times in 2017.

US financial markets were little moved by the claims data.

The Labor Department said claims for were estimated last week. It also said claims-taking procedures in and the Virgin Islands had still not returned to normal months after the territories were slammed by Hurricanes Irma and Maria.

Last week, the four-week moving average of initial claims, considered a better measure of 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 1.92 million in the week ended January 27. The four-week moving average of the so-called continuing claims rose 12,500 to 1.95 million.

First Published: Thu, February 08 2018. 20:02 IST