US initial jobless claims drop by 4K as expected

The number of Americans filing for unemployment benefits declined in line with expectations last week, according to data released by the Labor Department on Thursday.

US initial jobless claims fell by 4,000 to 226,000 from the previous week's level, which was revised down by 1,000

Meanwhile, the four-week moving average fell by 750 to 221,500 from the previous week's average, which was revised down by 250.

The four-week average is considered more reliable as it smooths out sharp fluctuations in the more volatile weekly figures, giving a more accurate picture of the health of the labour market.

The Labor Department said claims-taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

Continuing claims - i.e. the number of people already collecting unemployment benefits - rose by 4,000 to 1.88m. The previous week's level was revised up by 5,000 from 1.87m. The four-week moving average of continuing claims was down 17,250 to 1.89m from the previous week's average, which was revised up by 1,250.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "We thought the seasonals looked unfriendly for this week so we're happy to see claims dipping back to the upper 220s, which probably is now the underlying trend. This leaves claims boucing around all-time lows as a share of payrolls, with no sign at all of any softening. Indeed, we think claims next week will dip to just 220K.

"With hiring indicators still very elevated too, all the labor data we follow suggest that the trend in payroll growth will remain around 200K for the foreseeable future; even stronger numbers would be less surprising that job gains materially below 200K."