US unemployment benefits fall to 42-year low

Washington, October 15

New claims for US unemployment insurance benefits, a sign of the pace of layoffs, fell to a 42-year low last week, the government reported today.

Initial jobless claims dropped to 255,000 in the week ending October 10, down by 7,000 from the prior week’s downwardly revised level, the Labour Department said.

The four-week moving average, which helps to strip out volatility, fell to the lowest level since mid-December 1973. The average dropped by 2,250 to 265,000; a year ago, the average was 287,500.

Last week’s claims drop was unexpected, with analysts on average estimating a rise to 269,000.

“Yet, another startlingly low number, matching the mid-July cycle low, and the fourth sub-270K reading in five weeks. It’s now very hard to avoid the conclusion that the trend is falling again, though payroll growth has slowed,” said Ian Shepherdson of Pantheon Macroeconomics in a research note.

“Claims have historically been good barometers of the health of the job market and they suggest the economy is moving closer toward full employment,” said Ryan Sweet of Moody’s Analytics.

The US unemployment rate held unchanged in September at 5.1 per cent, a seven-year low, but job growth slowed markedly to a disappointing 142,000 payrolls.