WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits dropped to its lowest level in more than 44 years last week, pointing to a rebound in job growth after a hurricane-related decline in employment in September.
The labor market outlook was also bolstered by another report on Thursday showing a measure of factory employment in the mid-Atlantic region rising to a record high in October. The signs of labor market strength could cement expectations that the Federal Reserve will raise interest rates in December.
Initial claims for state unemployment benefits fell 22,000 to a seasonally adjusted 222,000 for the week ended Oct. 14, the lowest level since March 1973, the Labor Department said.
But the decrease in claims, which was the largest since April, was probably exaggerated by the Columbus Day holiday on Monday.
Claims are declining as the effects of Hurricanes Harvey and Irma wash out of the data. The hurricanes, which lashed Texas and Florida, boosted claims to 298,000 in early September.
A Labor Department official said claims for the Virgin Islands and Puerto Rico continued to be impacted by Irma and Hurricane Maria, which destroyed infrastructure. As a result the Labor Department continued to estimate claims for the islands.
Nonfarm payrolls dropped by 33,000 jobs in September as Hurricanes Irma and Harvey left more than 100,000 restaurant workers temporarily unemployed. The Virgin Islands and Puerto Rico are not included in nonfarm payrolls.
Economists had forecast claims falling to 240,000 in the latest week. The dollar pared losses against a basket of currencies after the data, while prices for U.S. Treasuries were unchanged.
LABOR MARKET TIGHTENING
Last week marked the 137th consecutive week that claims remained below the 300,000 threshold, which is associated with a strong labor market.
That is the longest such stretch since 1970, when the labor market was smaller. The labor market is near full employment, with the jobless rate at a more than 16-1/2-year low of 4.2 percent.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 9,500 to 248,250 last week.
The claims data covered the survey week for October nonfarm payrolls. The four-week average of claims fell 20,500 between the September and October survey periods, supporting views of a rebound in job growth this month.
In a separate report on Thursday, the Philadelphia Fed said its measure of factory employment in the mid-Atlantic region soared 24 points to a record high reading of 30.6 in October.
The average workweek index also increased 8 points to a reading of 19.4. It said no firms reported decreases in employment this month. The robust labor market readings helped to lift the Philadelphia Fed’s current manufacturing activity index four points to a five-month high of 27.9 in October, offsetting declines in new orders and shipments measures.
The claims report also showed the number of people still receiving benefits after an initial week of aid decreased 16,000 to 1.89 million in the week ended Oct. 7, the lowest level since December 1973.
The so-called continuing claims have now been below the 2 million mark for 27 straight weeks, pointing to diminishing labor market slack. The four-week moving average of
continuing claims dropped 22,750 to 1.91 million, the lowest level since January 1974. That was the 25th consecutive week that this measure remained below the 2 million market.
Reporting by Lucia Mutikani; Editing by Andrea Ricci