Drop in U.S. jobless claims points to labor market strength

June 9, 2016 09:25 AM

The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to sustained strength in the labor market despite a sharp slowdown in hiring last month.

Initial claims for state unemployment benefits declined 4,000 to a seasonally adjusted 264,000 for the week ended June 4, the Labor Department said on Thursday. Claims for the prior week were revised to show 1,000 more applications received than previously reported.

Economists polled by Reuters had forecast initial claims rising to 270,000 in the latest week. Claims have now been below 300,000, a threshold associated with a strong job market, for 66 straight weeks, the longest streak since 1973.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 7,500 to 269,500 last week.

A Labor Department analyst said there were no special factors influencing last week's claims data. Only claims for Maryland were estimated.

The dollar held earlier gains versus a basket of currencies after the data, while prices for U.S. Treasuries dipped. U.S. stock futures pared losses.

The report was the latest indication that the labor market remains strong even though the economy added only 38,000 jobs in May, the smallest gain since September 2010. A report on Wednesday showed job openings hitting a nine-month high in April and layoffs falling to their lowest level since September 2014.

The health of the labor market will likely determine the timing of the next Federal Reserve interest rate increase.

Fed Chair Janet Yellen this week reiterated the U.S. central bank's desire to raise rates, but gave no hints on when that might happen.

Before May's dismal jobs report, Yellen had signaled rates would rise "in coming months" if economic data continued to suggest that growth was picking up in the second quarter. The Fed lifted its benchmark overnight interest rate in December for the first time in nearly a decade.

Thursday's claims report showed the number of people still receiving benefits after an initial week of aid dropped 77,000 to 2.10 million in the week ended May 28, the lowest level since October 2000. The four-week average of the so-called continuing claims fell 17,500 to 2.15 million.

The insured unemployment rate fell one-tenth of a percentage point to a record low of 1.5%.

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