US weekly jobless claims drop more than expected

[WASHINGTON] The number of Americans filing for unemployment benefits fell more than expected last week, pointing to sustained labour market strength despite a recent slowdown in job growth.

Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 204,000 for the week ended Jan 11, the Labour Department said on Thursday. With the fifth straight weekly drop, claims unwound the surge seen in early December, which was blamed on a later-than-normal Thanksgiving Day. Claims data for the prior week was unrevised.

Economists polled by Reuters had forecast claims would rise to 216,000 in the latest week. The Labour Department said only claims for Alabama were estimated last week.

The claims data was volatile in late 2019, with applications dropping to 203,000 at the end of November and shooting up to 252,000 in early December.

The claims data showed layoffs in manufacturing, transportation and warehousing, construction, educational service and accommodation and food services industries in late 2019 and early 2020. That, together with widespread labor shortages reported in the Federal Reserve's Beige Book on Wednesday, could explain a slowdown in job growth in December.

The economy created 145,000 jobs last month after adding a hefty 256,000 positions in November. Still, the labour market remains on solid footing, with the unemployment rate holding near a 50-year low of 3.5 per cent in December.

The four-week moving average of initial claims, considered a better measure of labour market trends as it irons out week-to-week volatility, fell 7,750 to 216,250 last week.

Thursday's claims report also showed the number of people receiving benefits after an initial week of aid declined 37,000 to 1.77 million for the week ended Jan 4. The so-called continuing claims had surged to 1.80 million in the prior week, which was the highest level since April 2018.

The four-week moving average of the so-called continuing claims rose 10,500 to 1.76 million. 

REUTERS