US initial jobless claims unexpectedly decline

The number of Americans filing for unemployment benefits unexpectedly fell last week, according to data from the Labor Department.

US initial jobless claims fell by 9,000 to 221,000 from the previous week's unrevised averaged. Economists had been expecting an increase to 232,000.

Meanwhile, the four-week moving average came in at 224,500, down 10,000 from the previous week's unrevised average and marking the lowest level since 10 March 1973. 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.

Ian Shepherdson at Pantheon Macroeconomics said: "Yet another remarkable number, adding more weight to the idea that the trend is now lower than before the holiday season distorted the data for a time. Favorable seasonals might be holding the numbers down now too, but note that claims have been below their year-ago level in each of the past three weeks, by an average of 6.6%.

"The trend at this time last year was solidly about 245K, so that means the trend now appears to be a shade under 230K, a new cycle low and the lowest ever when the data are adjusted for population growth. The seasonals point to a spike next week, but that will prove temporary. Claims don’t tell us anything directly about the pace of hiring, but it's hard to imagine claims at these levels not being associated with very rapid growth in payrolls."