The number of Americans filing for unemployment benefits fell to a 43-year low last week, pointing to a rapidly tightening labor market that could allow the Federal Reserve to raise interest rates next month.
Initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 235,000 for the week ended Nov. 12, the lowest level since November 1973, the Labor Department said on Thursday. Claims for the prior week were unrevised.
Claims have now been below 300,000, a threshold associated with a healthy labor market, for 89 straight weeks. That is the longest run since 1970, when the labor market was much smaller.
Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 257,000 in the latest week.
A Labor Department analyst said there were no special factors influencing last week’s data and that no states had been estimated. Last week’s data included the Veterans Day holiday and claims tend to fall during weeks including a holiday.
As such, last week’s drop likely exaggerates labor market strength. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 6,500 to 253,500 last week.
The claims data covered the survey period for November non-farm payrolls. The four-week average of claims rose 1,500 between the September and October survey periods, still pointing to solid job gains this month. Employment increased by 161,000 jobs in October.
The strong labor market, viewed as being at or near full employment, and steadily rising inflation are expected to encourage the Fed to hike interest rates at the Dec. 13-14 policy meeting. The U.S. central bank raised its benchmark overnight interest rate last December for the first time in nearly a decade.
Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid decreased 66,000 to 1.98 million in the week ended Nov. 5, the lowest reading since April 2000.
The four-week average of the so-called continuing claims fell 19,250 to 2.02 million. That was the lowest level since June 2000.