US jobless claims fall to lowest level in 14 years

The number of Americans filing new claims for jobless benefits fell to a 14-year low last week, a positive signal that could counter doubts over whether the economy is shifting into a higher gear.

Initial claims for state unemployment benefits dropped 23,000 to a seasonally adjusted 264,000, the lowest level since 2000, the Labor Department said on Thursday.

The decline suggests the labour market is gaining steam even as worries grow that the economy will not be strong enough for the Federal Reserve to hike interest rates around the middle of next year.

Weak retail sales data on Wednesday shook investor convictions over the path of Fed policy and helped fuel a global sell-off in financial markets that continued on Thursday. US stock futures declined even after the claims data.

The report nonetheless reinforces expectations that slack in the labor market is being reduced, which would push the Fed closer to raising rates.

US stock futures were pointing to a lower open on Thursday. The S&P 500 index on Wednesday closed at its lowest level in six months.

While the spike in layoffs during the 2007-2009 recession is decidedly in America’s rear-view mirror, the pace of hiring has only increased modestly over the last year and the jobless rate remains elevated at 5.9 per cent.

Economists polled by Reuters had forecast claims rising to 290,000 for the week ended October 11th.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 4,250 to 283,500, also its lowest level since 2000.

The Labor Department said there were no special factors influencing the state level claims data.

The report showed the number of people still receiving benefits after an initial week of aid rose 7,000 to 2.39 million in the week ended October 4th.