The number of Americans making initial claims for state unemployment benefits dropped last week to the second lowest level in four decades, underscoring the strength of the labor market.
The Labor Department said initial jobless claims, a proxy for layoffs, dropped 28,000 to a seasonally adjusted 235,000 in the week ended Dec. 31. That was close to the 233,000 initial claims in November, the lowest level since November 1973.
Economists surveyed by The Wall Street Journal had expected 260,000 new claims last week.
Jobless applications have now stayed below the 300,000 threshold normally associated with a strong jobs market for 96 straight weeks, the longest period since 1970 when the labor market was much smaller.
“The level of claims is consistent with ongoing improvement in U.S. labor markets and the low level of layoffs will likely continue to support household confidence and spending,” Barclays economist Rob Martin said in a note to clients.
The four-week moving average of claims, which irons out week-to-week volatility, fell 7,500 to 256,750 last week. That broader trend, The Wall Street Journal said, suggests “employers continue to hire steadily or maintain payrolls rather than lay off workers.”
The WSJ noted that the labor market continues to strengthen despite rising borrowing costs after the presidential election victory of Donald Trump and expectations of further interest-rate increases by the central bank this year.
Thursday’s report also showed the number of people still receiving benefits after an initial week of aid increased 16,000 to just over 2.1 million in the week ended Dec. 24. The four-week average of continuing claims rose 26,250 to just over 2 million.