US initial jobless claims drop more than expected

The number of Americans filing for unemployment benefits fell more than expected last week, according to data released by the Labor Department.

US initial jobless claims dropped by 11,000 from the previous week’s unrevised level to 254,000, surpassing analysts’ expectations of a smaller drop to 260,000.

This marked the 88th consecutive week of initial claims below 300,000 – the longest streak since 1970.

Meanwhile, the four-week moving average came in at 259,750, down 1,750 from the previous week’s average, which was revised up to 258,000 from 257,750.

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.

Pantheon Macroeconomics said: "This is a surprisingly low reading; we thought the seasonals for this week looked quite tough, so a sub-260K level suggests that the underlying trend in layoffs remains very low and stable. We're expecting weaker hiring intentions over the next few months in the face of policy uncertainty under the new administration, but we don't expect to see any increase in the pace of layoffs.

"Growth has picked up since mid-year and qualified staff are very hard to find. Firms don't want to let people go in these circumstances unless they are under real pressure."