The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to a tightening labor market and strengthening economy at the start of the year.
Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 230,000 for the week ended Jan. 27, the Labor Department said on Thursday. Data for the prior week was revised to show 2,000 fewer claims received than previously reported.
Economists polled by Reuters had forecast claims rising to 238,000 in the latest week. The Labor Department said claims for Maine were estimated last week. It also said claims-taking procedures in Puerto Rico and the Virgin Islands had still not returned to normal months after the territories were slammed by Hurricanes Irma and Maria.
Last week marked the 152nd 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 much smaller.
The labor market is near full employment, with the jobless rate at a 17-year low of 4.1 percent. Tightening labor market conditions have raised optimism among Federal Reserve officials that inflation will increase towards the U.S. central bank’s 2 percent target this year.
The Fed on Wednesday left its benchmark overnight interest rate unchanged and described the labor market as having “continued to strengthen.” U.S. financial markets expect a rate increase in March. The Fed has forecast three rate increases for this year after lifting borrowing costs three times in 2017.
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, fell 5,000 to 234,500, the lowest level since early November.
The claims data has no bearing on January’s employment report, which is scheduled to be released on Friday, as it falls outside the survey period. According to a Reuters survey of economists, nonfarm payrolls probably rose by 180,000 jobs in January after increasing by 148,000 in December.
The claims report also showed the number of people receiving benefits after an initial week of aid increased 13,000 to 1.95 million in the week ended Jan. 20. The four-week moving average of the so-called continuing claims rose 12,000 to 1.93 million.