WASHINGTON (Reuters) - The number of Americans signing up for unemployment benefits unexpectedly fell last week, the latest sign of recovery in the labor market.
Initial claims for state jobless benefits dropped 15,000 to 358,000, the Labor Department said on Thursday. A four-week average of new filings, which provides a better view of the trend, hit its lowest level since April 2008.
The decline in first-time claims, which defied economists’ forecasts for a rise to 370,000, pointed to building strength in the labor market and raised the odds of another solid increase in employment this month.
“We are getting better employment growth and are seeing some signs that we are getting some self-sustaining aspects of economic activity,” said Michael Strauss, chief economist at Commonfund in Wilton, Connecticut.
U.S. employers added 243,000 workers to their payrolls in January and the unemployment rate dropped to a three-year low of 8.3 percent, leading many Wall Street economists to push forecasts for economic growth higher.
Last week’s decline in new applications for jobless aid brought them closer to the 350,000 mark that economists say would signal sustained labor market strength. Initial claims spent a lot of time below that level from 2004-2008 before they shot sharply higher as the economy’s troubles deepened.
U.S. stocks were trading marginally higher in early afternoon on optimism spurred by the data and by news that Greek leaders had reached a deal on reforms needed for a new bailout.
Prices for longer-dated U.S. Treasury debt tumbled, while the dollar fell marginally against a basket of currencies.
The economy grew at a 2.8 percent annual rate in the final three months of last year, according to a preliminary estimate last month. That marked a sharp step up from the third quarter’s 1.8 percent pace, and economists believe much of that momentum will be maintained.
Other data on Thursday showed a jump in wholesale inventories in December, suggesting the government’s fourth-quarter growth estimate could be revised higher.
But much will depend on the December trade data on Friday and a broader report on overall business inventories next week.
The recent string of upbeat data has raised doubts about whether the Federal Reserve will launch a third round of bond buying to spur the recovery.
“It does reduce the risk of additional monetary accommodation but I don’t think it changes in anyway the dial at the Fed for keeping rates accommodative at least at these levels for the foreseeable future,” said Millan Mulraine, senior macro strategist at TD Securities in New York.
Fed officials have said they expect to keep U.S. interest rates extraordinarily low at least through late 2014.
“As much as they have been encouraged by the past two months, that is just a modest down payment on what needs to be done to make improvements in labor market conditions,” Mulraine added.
Despite the brighter economic signs, about 23.8 million Americans are either out of work or underemployed and there are no job openings for nearly three out of every four unemployed people.
The number of people still receiving jobless benefits under regular state programs after an initial week of aid rose in the week ended January 28. A total of 7.66 million people were claiming unemployment benefits in the week ended January 21.
Reporting By Lucia Mutikani