US jobless claims hit 42–year low

The number of Americans filing for unemployment benefits unexpectedly fell last week, hitting its lowest level since 1973, suggesting the labour market continued to gain momentum despite weak economic growth.

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Initial claims for state unemployment benefits declined 6,000 to a seasonally adjusted 247,000 for the week ended April 16, the lowest reading since November 1973, the Labor Department said on Thursday. Claims for the prior week were unrevised.

Economists polled by Reuters had forecast claims rising to 263,000 in the latest week. Jobless claims have now been below 300,000, a threshold associated with healthy labour market conditions, for 59 weeks, the longest stretch since 1973.

The labour market is strengthening despite signs that economic growth braked sharply in the first quarter.

But labour market strength, against the backdrop of weak growth and benign inflation, is probably insufficient for the Federal Reserve to move away from its policy of gradually raising interest rates.

The Fed lifted its benchmark overnight interest rate in December for the first time in nearly a decade and policymakers recently forecast only two more rate rises this year.

The economy has been constrained by a strong dollar and weak global demand, which have undermined exports. Lower oil prices are also a drag, as they have eroded the profits of energy firms and prompted them to slash spending on capital projects.

First-quarter gross domestic product growth estimates are currently as low as a 0.2 per cent annualised rate. The economy grew at a 1.4 per cent rate in the fourth quarter.

A separate report on Thursday showed manufacturing activity in the mid-Atlantic region contracted in April after accelerating the prior month.

The Philadelphia Federal Reserve said its business conditions index fell to -1.6 this month from a reading of 12.4 in March. But the survey’s indicators of future activity showed continued improvement, suggesting that the relapse could be temporary.

US financial markets were little moved by the reports.