The number of Americans filing applications for unemployment benefits dropped from more than a two-year high last week, pointing to sustained labor market strength.
Initial claims for state unemployment benefits decreased 18,000 to a seasonally adjusted 234,000 for the week ended Dec. 14, the Labor Department said on Thursday.
Though the drop did not unwind the prior week's jump of 49,000, it likely does not indicate a material shift in labor market conditions as claims data tend to be volatile in the period following the Thanksgiving Day holiday.
The prior week's surge, which boosted claims to 252,000 — the highest reading since September 2017 — probably reflected a late Thanksgiving Day this year compared to 2018. That could have thrown off the model used by the government to strip out seasonal fluctuations from the data.
Economists polled by Reuters had forecast claims would fall to 225,000 in the latest week. They expect claims to remain elevated relative to October's low reading given volatility in the data around the holiday season and end of the year.
The Labor Department said no claims for states were estimated last week. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 1,500 to 225,500 last week. The underlying trend in claims remains consistent with a strong labor market.
Last week's claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls component of December's employment report.
The four-week moving average of claims rose 4,250 between the November and December survey periods, suggesting some cooling in job growth. The economy added 266,000 jobs in November, the most in 10 months. The unemployment rate fell back to 3.5%, the lowest in nearly half a century.
Labor market strength is underpinning consumer spending, keeping the economy on a moderate growth path despite headwinds from trade tensions and slowing global growth that have weighed on manufacturing.
Thursday's claims report also showed the number of people receiving benefits after an initial week of aid increased 51,000 to 1.72 million for the week ended Dec. 7. The four-week moving average of the so-called continuing claims rose 6,250 to 1.68 million.