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US jobless claims rise by 3,000 amid tightening labour market

Labor market tightness could encourage the Federal Reserve to unwind its $4.2 trn Treasury bonds

Reuters  |  Washington 

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The number of filing for benefits unexpectedly rose last week, but the underlying trend remained consistent with a tightening Initial claims for state benefits increased 3,000 to a seasonally adjusted 244,000 for the week ended Aug. 5, the Labor Department said on Thursday.

Data for the prior week were revised to show 1,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims would be unchanged at 2,40,000 in the latest week. With the near full employment, there is probably limited room for claims to continue declining.

Claims have now been below 300,000, a threshold associated with a healthy labour market, for 127 straight weeks. Thatis the longest such stretch since 1970, when the was smaller. The rate is 4.3 percent.

Labor market tightness could encourage the to announce a plan to start unwinding its $4.2 trillion portfolios of Treasury bonds and mortgage-backed securities at its policy meeting next month.

A Labor Department official said there were no special factors influencing the claims data and that no states had been estimated.

The four-week moving average of claims, considered a better measure of trends as it irons out week-to-week volatility, fell 1,000 to 241,000 last week, the lowest level since May.

The government reported last week that nonfarm payrolls increased by 209,000 jobs in July. The has added 1.29 million jobs this year.

That has resulted in the rate dropping five-tenths of a percentage point. Thursday's claims report also showed the number of people still receiving benefits after an initial week of aid fell by16,000 to 1.95 million in the week ended July 29. The so-called continuing claims have now been below the 2 million mark for 17straight weeks, pointing to diminishing slack.

The four-week moving average of continuing claims edged up 500 to 1.97 million, still remaining below the 2 million mark for the 15th consecutive week.