Shipping containers sit at the ports of Los Angeles and Long Beach, California.
Washington: New applications for US jobless benefits fell sharply last week and the number of Americans on unemployment rolls hit a 17-year low, pointing to a tightening labour market that could allow the Federal Reserve to raise interest rates next month.
Other data yesterday showed a mild improvement in the trade deficit in March, which bodes well for the economy’s prospects in the second quarter. While worker productivity fell in the first quarter, the overall trend is marginally firming.
Initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 238,000 for the week ended April 29, the Labour Department said. The decline unwound most of the prior two weeks’ increases, which economists had blamed on volatility arising from the different timings of the Easter holidays and spring breaks.
Claims have now been below 300,000, a threshold associated with a healthy labour market, for 113 straight weeks. That is the longest such stretch since 1970, when the labour market was smaller. The labour market is close to full employment, with the unemployment rate at a near 10-year low of 4.5 percent.
The Fed on Wednesday kept its benchmark overnight interest rate unchanged and said it expected labor market conditions would “strengthen somewhat further.”
Officials at the US central bank also viewed the pedestrian 0.7 percent annualised economic growth pace in the first quarter as likely “transitory” and expected economic activity to expand at a “moderate” pace. Most economists expect a rate hike next month.
Economists had forecast first-time applications for jobless benefits falling to 247,000 last week.
The number of people still receiving benefits after an initial week of aid declined 23,000 to 1.96 million in the week ended April 22, the lowest level since April 2000.
US financial markets were little moved by the data.
