The number of Americans filing for unemployment benefits unexpectedly fell last week, suggesting a rapid tightening of the labour market that bolsters expectations the Federal Reserve will raise interest rates next week. While another report on Thursday showed layoffs announced by US-based employers rising to a seven-month high in November, the overall trend in job cuts remained low.
"Layoffs on the part of corporations are few and far between as good help is hard to find this far along in one of the longest economic expansions in the record books," said Chris Rupkey, chief economist at MUFG in New York. Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 236,000 for the week ended December 2, the Labour Department said on Thursday. It was the third straight weekly decline in claims.
Economists polled by Reuters had forecast claims rising to 240,000 in the latest week. Last week marked the 144th straight
week that claims remained below the 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since 1970, when the labor market was smaller. The labour market is near full employment, with the jobless rate at a 17-year low of 4.1 percent. Labor market tightness is seen encouraging the Fed to hike interest rates at the December 12-13 policy meeting. The US central bank has increased borrowing costs twice this year.
Last week, the four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, edged down 750 to 241,500. The claims report also showed the number of people receiving benefits after an initial week of aid fell 52,000 to 1.91 million in the week ended November 25. The four-week moving average of the so-called continuing claims rose 1,000 to 1.91 million.
In a separate report, global outplacement consultancy Challenger, Gray & Christmas said US-based employers announced plans to cut payrolls by 35,038 jobs in November. That was the most in seven months and was up 17 percent from October. The trend in layoffs, however, remains low.
Employers have announced 386,347 job cuts through November, down 22 percent compared to the same period last year and the lowest since 1997.
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