The number of Americans filing for unemployment benefits fell more than expected last week, reinforcing views of labor market strength that could encourage the Federal Reserve to raise interest rates soon.
Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 262,000 for the week ended Aug. 13, the Labor Department said on Thursday. Claims for the prior week were unrevised.
Economists polled by Reuters had forecast initial claims slipping to 265,000 in the latest week.
Claims have now been below 300,000, a threshold associated with a strong labor market, for 76 straight weeks. That is the longest such stretch since 1973, when the labor market was much smaller.
The labor market is now viewed as either at or near full employment, suggesting limited scope for more declines in claims. Labor market buoyancy, marked by robust hiring in the last two months and diminishing slack, could prompt the Fed to raise interest rates despite low inflation and sluggish economic growth in the first half of the year.
New York Fed President William Dudley, an influential policymaker at the U.S. central bank, said on Tuesday it was “possible” to hike rates at the Fed’s Sept. 20-21 policy meeting.
But the minutes from the July 26-27 meeting, which were released on Wednesday, showed Fed policymakers were divided on the urgency of a rate hike amid concerns about benign inflation.
They also noted that “some other members (of the Fed’s rate-setting committee) anticipated that economic conditions would soon warrant taking another step in removing policy accommodation.”
The Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade.
A Labor Department analyst said there were no special factors influencing last week’s claims data and only claims for Vermont had been estimated.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 2,500 to 265,250 last week. The claims data covered the survey week for the August nonfarm payrolls report.
The four-week moving average of claims increased 7,750 between the July and August survey periods, suggesting another month of strong job gains. The economy created 255,000 jobs in July, adding to the 292,000 positions gained in June.
Thursday’s claims report showed the number of people still receiving benefits after an initial week of aid increased 15,000 to 2.18 million in the week ended Aug. 6. The four-week average of the so-called continuing claims rose 10,750 to 2.16 million.