(Reuters) – The number of Americans filing new claims for unemployment benefits fell more than expected last week and compensation accelerated in the third quarter, in the latest signs of tightening labor market conditions.
Thursday’s upbeat data underscored the resilience of the economy and some analysts said the pick-up in wage growth moved the Federal Reserve closer to start raising interest rates.
“The first precondition to higher policy rates is now being achieved,” said Eric Green, chief economist at TD Securities in New York.
Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 278,000 for the week ended Nov. 1, the Labor Department said. The four-week moving, which irons out week-to-week volatility, hit a 14-1/2 year low.
Wall Street had forecast claims dipping to 285,000. Claims have held below the 300,000 threshold for eight straight weeks.
A report on Wednesday showed private payrolls increased 230,000 in October, for a record seven straight months of job gains exceeding 200,000.
The government is expected to report on Friday that nonfarm payrolls advanced 231,000 last month after rising 248,000 in September, according to a Reuters survey of economists. The jobless rate is seen steady at a six-year low of 5.9 percent.
In a second report, the Labor Department said compensation per hour increased at a 2.3 percent rate in the third quarter after a similar rise in the prior quarter.
But with productivity advancing nearly as much, unit labor costs, a key gauge of inflation and profit pressures that measures the price of labor for any given unit of output, rose at only a 0.3 percent rate after decline at a 0.5 percent pace.