The number of Americans filing new claims for unemployment benefits fell last week and job cuts declined sharply in December, suggesting the labor market is tightening.
Thursday’s reports support views of faster growth this year, driven by consumer spending, despite a faltering global economy.
“Labor market conditions continue to improve, providing support for consumers and contributing to a virtuous cycle for the economy,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.
Initial claims for state unemployment benefits slipped by 4,000 to a seasonally adjusted 294,000 for the week ended Jan. 3, the Labor Department said.
While that was a bit less than Wall Street’s expectations of a drop to 290,000, the trend in claims remained consistent with a steadily tightening labor market. At current levels, claims probably have little room to fall further.
“Claims have never dropped below the 280,000-290,000 range in the last 20 years, reflecting the reality that a certain number of layoffs is a natural part of the growth/lifecycle of companies even in the best of times,” said Anthony Karydakis, chief economic strategist at Millar Tabak in New York.
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