U.S. labor market conditions tightening but worker productivity slowing
The number of Americans filing for unemployment benefits fell more than expected last week, pointing to tightening labor market conditions that should support the economy this year.
While other data on Thursday showed a 37 percent jump in layoffs in January, the job cuts were mostly related to department store closures as retailers try to adjust to consumers’ preferences for online shopping.
Initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 246,000 for the week ended Jan. 28, the Labor Department said. Claims have now been below 300,000, a threshold associated with a healthy labor market, for 100 straight weeks. That is the longest stretch since 1970, when the labor market was much smaller.
“The readings continue to point to a job market where employers are confident of continued gains and content to maintain or expand their workforce,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.
The labor market is at or close to full employment, and the Federal Reserve said on Wednesday it expected labor market conditions would strengthen “somewhat further.” A tight labor market is expected to boost wage growth and support the economy through strong consumer spending and a continued housing market recovery.
The Fed, which has forecast three interest rate increases this year, kept its benchmark overnight lending rate unchanged in a range of 0.50 percent to 0.75 percent at the end of its latest two-day policy meeting on Wednesday. The U.S. central bank increased borrowing costs in December.
Economists polled by Reuters had forecast first-time applications for jobless benefits falling to 250,000 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, rose 2,250 to 248,000 last week.
U.S. stock index futures trimmed losses after the data. Prices for U.S. Treasuries were higher, while the dollar was weaker against a basket of currencies.
