Jobless claims drop less than expected

The number of Americans filing for unemployment benefits fell less than expected last week, according to figures from the Labor Department.

US initial jobless claims decreased by 19,000 from the previous week's unrevised level to 234,000, versus expectations for a bigger drop to 221,000.

Meanwhile, the four-week moving average came in at 224,750, up 4,500 from the previous week's average.

The four-week average is considered more reliable as it smooths out sharp fluctuations in the more volatile weekly figures, giving a more accurate picture of the health of the labour market.

Continuing claims - i.e. the number of people already collecting unemployment benefits - fell to 1.736m from a revised 1.778m the week before, versus expectations for a level of 1.720m. The previous week's level was revised down by 4,000.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "The 53k leap in claims last week was due mostly to seasonal adjustment problems, though it’s possible that unpaid government contractors also boosted the numbers. Either way, the lack of a complete reversal this week probably is nothing to worry about; the flaws in the seasonal adjustments don’t always reverse immediately, and it’s possible that the extraordinarily cold weather in the mid-west last week lifted claims a bit.

"We expect claims to drop gradually back to the trend, about 210-to-220k, over the next few weeks. New cycle lows would be a surprise, because the economy can’t sustain its recent tax cut-assisted pace, but equally we see little near-term risk of a sustained uptrend. Most indicators of the pace of hiring remain very strong."