WASHINGTON--The number of Americans filing new claims for unemployment benefits increased less than expected last week, pointing to tightening labour market conditions, while layoffs tumbled to the lowest level in 28-1/2 years in November.
The weekly unemployment claims report from the Labor Department on Thursday, the most timely data on the economy's health, also showed jobless benefits rolls falling below 2 million for the first time since the COVID-19 pandemic started in the United States nearly two years ago.
The upbeat news on the labour market added to strong consumer spending and manufacturing data in suggesting that the economy was accelerating after hitting a speed bump in the third quarter. The Omicron variant of the coronavirus, however, poses a risk to the brightening picture.
Federal Reserve Chair Jerome Powell in a nod to the strengthening economy told lawmakers this week that the U.S. central bank should consider accelerating the pace of winding down its bond purchases at its Dec. 14-15 policy meeting.
"Companies are not laying off workers like they did during the recession," said Christopher Rupkey, chief economist at FWDBONDS in New York. "Powell was right to hint the Fed might speed up the tapering process because a tight labor market means increasing wage demands will stoke the fires of inflation."
Initial claims for state unemployment benefits rose 28,000 to a seasonally adjusted 222,000 for the week ended Nov. 27. Claims dropped to 194,000 in the prior week, which was the lowest number since 1969.
They tend to be volatile around this time of the year. Economists polled by Reuters had forecast 240,000 applications for the latest week. Claims have declined from a record high of 6.149 million in early April 2020.
Unadjusted claims fell 41,622 to 211,896 last week amid sharp declines in filings in California, Texas and Virginia, which offset notable rises in North Carolina and Wisconsin.
"Before seasonal adjustment, claims generally move higher in the colder months, but the related layoffs may not be occurring like normal this year because of the tight labor market," said Daniel Silver, an economist at JPMorgan in New York. "This could continue to occur in the coming weeks."
Stocks on Wall Street were trading higher. The dollar dipped against a basket of currencies. U.S. Treasury prices fell.
The claims data has no bearing on the department's closely watched employment report for November, scheduled to be published on Friday, as it falls outside the period during which the government surveyed businesses and households for the nonfarm payrolls count and the unemployment rate. Claims declined between mid-October and mid-November.
According to a Reuters survey of economists, nonfarm payrolls probably increased by 550,000 jobs last month after rising 531,000 in October. The unemployment rate is forecast dipping to 4.5% from 4.6% in October.
Also arguing for continued improvement in the labour market, the ADP National Employment report on Wednesday showed private payrolls increased by 534,000 jobs last month. A measure of manufacturing employment rose to a seven-month high, a survey from the Institute for Supply Management showed.
