The number of Americans filing new claims for unemployment benefits fell last week, missing economists’ expectations for the week ended Jan. 3.
Initial claims for state unemployment benefits fell by 4,000 to a seasonally adjusted 294,000, according to the Labor Department report released Thursday.
However, economists polled by Reuters had forecast claims falling to 290,000 last week, while the prior week’s data, which was also higher than expected, was unrevised.
Claims have been more volatile around the Christmas holiday period, a typical reflection of cyclical hiring. But at current levels, claims have little room to fall further. The four-week moving average of claims, which is widely considered a better measure of labor market trends as it irons out week-to-week volatility, fell by 250 to 290,500 last week.
Though it has remained below 300,000 for 17 straight weeks, the number is still relatively high considering the low number of eligible participants in the labor market. Chronic long-term employment has reduced the number of people who are able to apply for first-time benefits.
Still, despite terrible manufacturing and service sector data, employment data suggest another month of decent job creation in December. That, of course, is to be expected considering the holiday hiring season. The number of part-time versus full-time jobs will be closely watched when the government releases the upcoming jobs report.
The Federal Reserve will watch the report and the entire labor market to determine if they should take a step closer to raising its short-term interest rate, which it has been dangerously held near zero since December 2008.
The claims report showed the number of people still receiving benefits after an initial week of aid increased by 101,000 to 2.45 million in the week ended Dec. 27. The four-week average of the so-called continuing claims fell by 17,000 to 2.40 million.