Initial jobless claims unexpectedly dropped to their lowest level since 1973.
Claims, which count people applying for unemployment insurance for the first time, fell to 235,000.
That is the lowest level for claims since November 24, 1973 when it was 233,000. Plus, claims have been below 300,000 for 89 consecutive weeks.
Economists had forecast claims ticked up slightly to 257,000 last week, according to the Bloomberg survey.
“It is impressive that claims have achieved the same level of the 1970s in a labour market that has roughly doubled in size. It is so impressive that there is some scepticism regarding the comparability of current claims data relative to the claims data from 40 years ago,” wrote Ward McCarthy, chief financial economist at Jefferies, in a note to clients.
“A recent article published by Bloomberg News highlights the fact that a combination of reduced duration of benefits and technological changes since 2011 that have reduced the number of both initial and continuing claims. The result is that current claims data are comparable with the data from the past few years, but less so with data from a long time before that. Therefore the level of claims may be somewhat misleading, but we still interpret the trajectory of claims as characteristic of a strong labour market.”
Initial jobless claims are used as a real-time proxy for the pace of layoffs and the overall health of the labour market, since people usually file for benefits soon after they lose their jobs.
The 4-week moving average came in at 253,500, a decrease of 6,500 from the previous week’s revised average. The report noted that there were no special factors impacting this week’s initial claims.
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