The number of Americans filing for unemployment benefits fell more than expected last week, hitting its lowest level since October, pointing to sustained strength in the labor market that should further dispel fears of a recession. Initial claims for state unemployment benefits declined 18,000 to a seasonally adjusted 259,000 for the week ended March 5, the lowest reading since mid-October, the Labor Department said on Thursday. The prior week’s claims were revised to show 1,000 fewer applications received than previously reported.
Claims are being watched for any sign of labor market weakness following a recent massive stock market sell-off that caused financial market conditions to tighten amid fears the economy was heading into recession.
So far, the labor market remains on strong footing, with nonfarm payrolls increasing by 242,000 jobs in February and the unemployment rate holding at an eight-year low of 4.9 percent.
The recession fears have also been soothed by strong consumer spending at the start of the year, as well as signs of some stabilization in the troubled manufacturing sector.
A tightening labor market and firming inflation could see the Federal Reserve gradually raising interest rates this year. The U.S. central bank hiked its benchmark overnight interest rate in December for the first time in nearly a decade.