WASHINGTON: The number of Americans filing for unemployment benefits dropped to a nine-month low last week – suggesting a tightening labour market would continue to keep the longest economic expansion in history on track.
The economy is, however, likely to remain on a moderate growth path, with other data yesterday showing worker productivity rebounding less than expected in the fourth quarter.
Sluggish productivity is one of the reasons the economy has struggled to achieve the Trump administration’s target of three per cent annual growth. The economy grew 2.3pc last year, the slowest in three years, after logging 2.9pc in 2018.
Initial claims for state unemployment benefits decreased 15,000 to a seasonally adjusted 202,000 for the week ended Februray 1, the lowest reading since last April, the Labour Department said. Economists had forecast claims dipping to 215,000 in the latest week.
The Labour Department said only claims for Alabama and Pennsylvania were estimated last week. 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 3,000 to 211,750 last week, also the lowest level since last April.
The claims data has no bearing on January’s employment report, which is scheduled for release today, as it falls outside the survey period. Claims were lower in January relative to December, suggesting a pick-up in job growth.
According to a survey of economists, nonfarm payrolls likely increased by 160,000 jobs in January after rising 145,000 in December.
Employment gains could, however, exceed expectations given unseasonably mild weather, which could have boosted hiring at construction sites and in the leisure and hospitality industry.
The ADP National Employment report on Wednesday showed private payrolls surged by 291,000 jobs in January, the most since May 2015, after increasing 199,000 in December.
US financial markets were little moved by the data.
Labour market strength is helping to underpin consumer spending, supporting the economy, now in its 11th year of expansion. In another report yesterday, the Labour Department said nonfarm productivity, which measures hourly output per worker, increased at a 1.4pc annualised rate last quarter.
Productivity decreased at an unrevised 0.2pc pace in the July-September period, the biggest drop since the fourth quarter of 2015. Economists had forecast productivity rebounding at a 1.6pc rate in the fourth quarter.