The number of Americans filing for unemployment benefits rose slightly last week but the four-week average of such claims, considered a better gauge, fell to a 43-1/2-year low in a sign of a strengthening labor market.
Other data on Thursday showed house prices increasing solidly in December amid strong demand for housing even as mortgage rates rose. The reports highlighted strength in the economy that could allow the Federal Reserve to raise interest rates in the near-term.
“All indications are that job creation remains solid, underscoring the resiliency of the nearly eight-year economic recovery,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan. “A March (rate) hike cannot be ruled out.”
Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 244,000 for the week ended Feb. 18, the Labor Department said. It was the 103rd straight week that claims remained below 300,000, a threshold associated with a healthy labor market.
That is the longest stretch since 1970, when the labor market was much smaller. The labor market is at or close to full employment, with the unemployment rate at 4.8 percent.
Economists had forecast new claims for unemployment benefits rising to 241,000 in the latest week. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 4,000 to 241,000 last week, the lowest reading since July 1973.
The economy could get a boost from a tax reform being mulled by the Trump administration. Treasury Secretary Steven Mnuchin said on Thursday he wanted to see “very significant” tax reform passed before Congress’ August recess. Mnuchin, however, said the government was still studying the merits of a proposed border tax system.
Hopes of tax cuts have boosted business and consumer confidence in recent months. The dollar was trading lower against a basket of currencies, hitting a two-week low versus the yen. Stocks on Wall Street slipped, while prices for U.S. government debt rose.
Minutes of the Federal Reserve’s Jan 31-Feb 1 monetary policy meeting published on Wednesday showed that many policymakers believed another interest rate hike might be appropriate “fairly soon” if labor market and inflation data meet or beat expectations.
The U.S. central bank raised its benchmark overnight interest rate last December. It has forecast three rate increases this year.