The number of Americans filing new claims for unemployment benefits fell last week, adding to signs of a strengthening labor market.
Initial claims for state unemployment benefits slipped by 4,000 to a seasonally adjusted 294,000 for the week ended Jan. 3, the Labor Department said on Thursday.
Economists polled by Reuters had forecast claims falling to 290,000 last week. The prior week's data was unrevised.
"Claims data, particularly on the continuing claims side, continue to be volatile as seasonal factors work their way through the data," Barclays Research economist Jesse Hurwitz wrote in an e-mailed analysis. "The insured unemployment rate was unchanged at 1.8% in the latest reading and the Labor Department reported no special factors in this week’s report. On balance, separations at historically low levels reflect continued labor market improvement, which we expect will continue through the year."
Claims have been bouncing around in a tight range, which is typical around the Christmas holiday period. Through the volatility, however, the trend in claims has remained consistent with a steadily tightening labor market.
At current levels, claims probably have little room to fall further. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, dipped by 250 to 290,500 last week.
It has remained below 300,000 for 17 straight weeks. Employment data released so far point to another month of strong job gains in December.
The strengthening labor market backdrop could bring the Federal Reserve a step closer to raising its short-term interest rate, which it has kept 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. (Reporting by Lucia Mutikani; Editing by Paul Simao)