The number of Americans filing for unemployment benefits last week fell from a five-month high, suggesting sustained labor market healing that could lead to further Federal Reserve interest rate hikes next year. Initial claims for state unemployment benefits dropped 11,000 to a seasonally adjusted 271,000 for the week ended Dec.12, the Labor Department said on Thursday. The prior week’s claims were unrevised.
It was the 41st straight week that claims remained below 300,000, a threshold associated with strong labor market conditions. That is the longest such run since the early 1970s.
“The labor market continues to stay tight with demand for workers strong and pockets of actual shortages in many industries. The Fed has achieved the employment part of its dual mandate and this is what triggered the rates liftoff yesterday,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.
The Fed on Wednesday raised its benchmark overnight interest rate by 25 basis points to between 0.25 percent and 0.50 percent, the first hike in nearly a decade.
The U.S. central bank said in its policy statement that there had been “further improvement” in the labor market and that “underutilization of labor resources” had diminished appreciably since the beginning of the year.
U.S. stock index futures pared gains after the data on Thursday, while prices of U.S. government debt were trading higher. The dollar rose sharply against a basket of currencies.
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