US initial jobless claims unexpectedly drop

The number of Americans filing for unemployment benefits unexpectedly fell last week to a near-three month low, according to figures from the Labor Department.

US initial jobless claims declined 12,000 from the previous week's unrevised level to 234,000. Economists had been expecting a jump to 250,000.

Meanwhile, the four-week moving average came in at 244,250, down 3,750 from the previous week’s unrevised average of 248,000. This marked the lowest level for this average since November 3, 1973 when it was 244,000.

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: “Just when it seemed claims were mean-reverting after a run of low numbers, which plausibly could be blamed on seasonal adjustment problems, they have lurched down again. The Labor Department has identified no special factors this week, and no states supplied estimated data. This does not prove that the trend in claims is falling again, but it is consistent with the idea that business confidence has risen since the election.

“Typically, when survey-based indicators of hiring rise, claims tend to fall. We still need more data to be sure, but the eight-week moving average has dipped to a new cycle low of just over 250K.”