The number of Americans filing for unemployment benefits last week fell from a five-month high, suggesting sustained labor market healing that could lead to further Federal Reserve interest rate hikes next year.
Initial claims for state unemployment benefits dropped 11,000 to a seasonally adjusted 271,000 for the week ended Dec. 12, the Labor Department said on Thursday. The prior week's claims were unrevised.
It was the 41st straight week that claims remained below 300,000, a threshold associated with strong labor market conditions. That is the longest such run since the early 1970s.
"The labor market continues to stay tight with demand for workers strong and pockets of actual shortages in many industries. The Fed has achieved the employment part of its dual mandate and this is what triggered the rates liftoff yesterday," said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.
The Fed on Wednesday raised its benchmark overnight interest rate by 25 basis points to between 0.25 percent and 0.50 percent, the first hike in nearly a decade.
The U.S. central bank said in its policy statement that there had been "further improvement" in the labor market and that "underutilization of labor resources" had diminished appreciably since the beginning of the year.
U.S. stock index futures pared gains after the data on Thursday, while prices of U.S. government debt were trading higher. The dollar rose sharply against a basket of currencies.
While claims tend to be volatile around the holiday session, the trend has continued to point to strengthening labor market conditions. The four-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, slipped 250 to 270,500 last week.
The claims data covered the survey period for December nonfarm payrolls. The four-week average of claims dipped 500 between the November and December survey periods, suggesting another strong month of job gains. Payrolls increased by 211,000 in November.
As the labor market approaches full employment, claims probably have little room for further declines.
The claims report showed the number of people still receiving benefits after an initial week of aid fell 7,000 to 2.24 million in the week ended Dec. 5. The four-week moving average of the so-called continuing claims increased 16,250 to 2.20 million.
CURRENT ACCOUNT DEFICIT RISES
A separate report from the Commerce Department showed a surge in the current account deficit in the third quarter as the dollar's strength weighed on exports and the profits of multinational corporations.
The current account deficit, which measures the flow of goods, services and investments into and out of the country, increased 11.7 percent to $124.1 billion, the largest shortfall since the fourth quarter of 2008.
The third-quarter current account deficit represented 2.7 percent of gross domestic product, the biggest percentage since the second quarter of 2012. That was up from 2.5 percent in the second quarter.
The dollar has gained 19.2 percent versus the currencies of the United States' main trading partners over the last 18 months, putting pressure on the profits of multinational firms such as household products giant Procter & Gamble Co and healthcare conglomerate Johnson & Johnson.
In the third quarter, direct investment income receipts from subsidiaries of U.S. companies fell to $105.3 billion from $108.0 billion. Exports of goods fell 1.2 percent to $379.9 billion.
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