New applications for USA jobless benefits unexpectedly fell last week and the number of Americans receiving unemployment aid hit a 28-1/2-year low, pointing to rapidly shrinking labor market slack.
US Initial jobless claims declined to 232,000 in the week ending May 13th from 236,000 previously while consensus forecasts were for a small increase to around 240,000 for the week.
Applications are a proxy for layoffs. The four-week moving average dropped to 241k.
The Jobless claims have been below 300,000 for 115 straight weeks, the longest streak since 1970.
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Thursday's claims report also showed the number of people still receiving benefits after an initial week of aid dropped 22,000 to 1.90 million in the week ended May 6, the lowest level since November 1988. The figure has fallen 12 per cent in the past year.
Although hiring has tapered off over the past few years, the economy is still adding roughly twice as many jobs as necessary to absorb new entrants into the labor force and keep downward pressure on the unemployment rate.
Estimates of jobless claims can be volatile from week to week, but generally have hovered near four-decade lows in recent months, suggesting that employers are holding on to workers. That has resulted in an increase of consumer spending which is cranking up the economy and driving the need for more workers. Claims fell 11,000 between the April and May survey periods suggesting further job gains this month. And Americans spent more at restaurants and retail stores last month.