The number of Americans filing new claims for unemployment benefits tumbled last week to its lowest level in nearly 15 years, adding to bullish signals on the labor market.
Initial claims for state unemployment benefits dropped 43,000 to a seasonally adjusted 265,000 for the week ended Jan. 24, the lowest since April 2000, the Labor Department said on Thursday. It was the biggest weekly decline since November 2012.
The drop, which far exceeded economists' expectations for a fall to only 300,000, probably exaggerates the strength of the jobs market as the data included the Martin Luther King holiday, which means fewer claims were likely processed.
It unwound the prior weeks' increases, which had pushed claims above the key 300,000 threshold. Economists had largely dismissed that rise as "noise," noting difficulties adjusting the data for seasonal fluctuations at the start of the year.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 8,250 last week to 298,500.
The latest decline in applications for unemployment aid bolsters views of tightening labor market conditions and comes a day after the Federal Reserve maintained its upbeat assessment of the jobs market.
The U.S. central bank said a range of labor indicators suggested slack continued to diminish. That is likely to be further reinforced next week when the government publishes January's employment report.
Nonfarm payrolls likely increased 230,000 after rising 252,000 in December, according to a Reuters survey of economists. That would mark the 12th consecutive month of jobs gains above 200,000, the longest stretch since 1994.
The claims report showed the number of people still receiving benefits after an initial week of aid fell 71,000 to 2.39 million in the week ended Jan. 17. The so-called continuing claims covered the period during which the government surveyed households for the unemployment rate.
Continuing claims fell 22,000 between the December and January survey periods, suggesting another drop in the jobless rate, which is currently at a 6-1/2-year low of 5.6 percent.