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U.S. Jobless Claim Drops to Lowest Level

By Arthur Greene November 17, 2016
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U.S unemployment benefits unexpectedly decreased in the week ended November 12th, according to a report released by the Labor Department on Thursday, with claims falling to their lowest level in over forty years.
The report said initial jobless claims fell to 235,000, a decrease of 19,000 from the previous week's unrevised level of 254,000.

Economists had expected jobless claims to inch up to 257,000. Initial claims have been under the key 300,000 threshold for 89 straight weeks — and counting. The last time that happened was in 1970. The U.S.’s unemployment rate also sits near an eight-year low of 4.9%.

Companies have ramped up hiring over the past five years, and many complain they cannot find enough skilled workers to quickly fill open positions.

The biggest drop in initial claims since June suggests employers are loath to fire workers as the economy continues its modest expansion and the number of experienced applicants available for hiring remains limited. Filings for unemployment benefits have stayed below 300,000 for 89 straight weeks -- the longest streak since 1970 and a level typical for a healthy labor market.

“We’re exhausting the pool of workers that we can draw from out of the unemployed,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “We’re approaching full employment, so we’re seeing really strong job gains, but they can’t continue for very long.”

The strong labor market, viewed as being at or near full employment, and steadily rising inflation are expected to encourage the Fed to hike interest rates at the Dec. 13-14 policy meeting. The U.S. central bank raised its benchmark overnight interest rate last December for the first time in nearly a decade.

The number of Americans filing for unemployment benefits fell to a 43-year low last week, pointing to a rapidly tightening labor market that could allow the Federal Reserve to raise interest rates next month.

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By Arthur Greene November 17, 2016

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