- Drop eases concern that prior jump signaled weakness
- Few firings point to steady demand for workers after holidays
Applications for unemployment benefits in the U.S. declined last week from a six-month high, indicating firings remain low following the volatility typically associated with post-holiday staff adjustments.
Jobless claims fell by 16,000 to 278,000 in the week ended Jan. 23, from 294,000 in the prior period, a report from the Labor Department showed on Thursday in Washington. The median forecast of 51 economists surveyed by Bloomberg called for 281,000. The number of those continuing to receive benefits climbed.
While a shorter filing period due to the Martin Luther King Jr. holiday and bad weather in some parts of the U.S. probably influenced the weekly data, the recent trend shows employers are holding on to workers to meet demand. Claims near four-decade lows are consistent with labor market improvement that the Federal Reserve cited on Wednesday after its meeting.
“The holiday and bad weather may have complicated things,” said David Sloan, a senior economist at 4Cast Inc. in New York. “There’s no sign anything has changed dramatically. I don’t think companies are rushing to lay off workers.”
Estimates in the Bloomberg survey ranged from 255,000 to 290,000. The previous week’s figure was initially reported as 293,000.
The four-week moving average, a less volatile measure than the weekly claims numbers, decreased to 283,000 last week, from 285,250.
The number of people continuing to receive jobless benefits rose by 49,000 to 2.27 million in the week ended Jan. 16. The unemployment rate among people eligible for benefits climbed to 1.7 percent from 1.6 percent the prior period. These data are reported with a one-week lag.
Since early March, claims have been below the 300,000 level that economists say is typically consistent with an improving job market.
Fed policy makers, who left the benchmark rate unchanged on Wednesday after raising it from zero last month, said the labor market had continued to make strides. They still expect to raise borrowing costs at a “gradual” pace while watching to see how the global economy and markets impact the U.S. outlook.
“Information received since the Federal Open Market Committee met in December suggests that labor market conditions improved further even as economic growth slowed late last year,” the central bank said in the Jan. 27 statement following its meeting.
Initial jobless claims reflect weekly firings, and a sustained low level of applications has typically coincided with faster job gains. Many layoffs may also reflect company- or industry-specific causes, such as cost-cutting or business restructuring, rather than underlying labor market trends.