WASHINGTON The number of Americans filing for jobless benefits fell last week and layoffs in December were the smallest in 15-1/2 years, pointing to labor market strength even as economic growth appears to have slowed sharply in the fourth quarter.
Coming on the heels of a report on Wednesday showing private payrolls in December notched their biggest increase in a year, the data on Thursday suggest the economy's fundamentals remain healthy as it struggles against the headwinds of a strong dollar, bloated inventories and energy sector investment cuts.
"The data are supportive of continued job gains. You don't go into a recession with jobless claims and layoffs at these low levels," said Jacob Oubina, senior economist at RBC Capital Markets in New York.
Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 277,000 for the week ended Jan. 2, the Labor Department said. The decline partially unwound the prior week's jump, which had lifted claims to their highest level since early July.
Last week was the 44th straight week that claims held below the 300,000 mark, which is associated with a healthy labor market. That is the longest run since the early 1970s.
The four-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, slipped 1,250 to 275,750 last week.
The encouraging news on the labor market comes ahead of the release on Friday of the closely watched employment report for December. According to a Reuters survey of economists, nonfarm payrolls likely increased 200,000 in December, on top of the 211,000 jobs added in November. The unemployment rate is seen unchanged at a 7-1/2-year low of 5 percent.
"The current (claims) data continue to indicate that U.S. labor markets are fundamentally healthy. We expect a similar read from tomorrow's December employment report," said Jesse Hurwitz, an economist at Barclays in New York.
Should the December employment report meet expectations, it could calm fears over the U.S. economy and ease some pressure on global equity markets, which have suffered a sell-off this week on concerns about the impact of slowing growth in China on the world economy.
Weak reports on U.S. manufacturing, construction spending, auto sales and export growth prompted economists this week to slash their fourth-quarter GDP growth estimates by as much as one percentage point to as low as a 0.5 percent annual pace. The economy grew at a 2 percent annual rate in the third quarter.
U.S. stocks were trading lower on Thursday, also as a continued decline in oil prices rattled investors. The dollar weakened against a basket of currencies and prices for longer-dated U.S. government debt fell.
In a separate report, global outplacement consultancy Challenger, Gray & Christmas said U.S.-based employers announced plans to cut 23,622 jobs in December, the fewest since June 2000. That was down 24 percent from November and the lowest December job-cut total on record.
For all of 2015, announced layoffs totaled 598,510, the most since 2011. Job cuts last year were mostly driven by the energy sector, which has been roiled by a collapse in oil prices, as well as layoffs in the military.
There were 94,409 announced layoffs in the energy sector last year, nearly seven times the job cuts announced in this industry in 2014. The United States Army announced plans to cut 57,000 troops and civilian personnel from its ranks.
"Low job cut announcements, layoff rates, and jobless claims point to companies seeking to retain workers in a tighter labor market environment," said John Ryding, chief economist at RDQ Economics in New York.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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Updated Date: Jan 08, 2016 00:45 AM