U.S. Jobless Claims Plunge

Initial applications for unemployment benefits in the United States unexpectedly dropped last week to the lowest level in more than a year, underscoring the resilience of the labor market to start the year.

Initial claims decreased by 16,000, to 187,000, in the week ending January 13, according to Labor Department data released on Thursday. The figure was below all estimates in a Bloomberg survey of economists.

Among states, New York posted the steepest decline, falling over 17,000 on an unadjusted basis after a large increase in the previous week.

Continuing claims, a proxy for the number of people receiving unemployment benefits, decreased for a third straight week, to 1.81 million in the week ending January 6, the lowest since October.

While weekly claims tend to be volatile, especially around holidays, the four-week moving average of initial applications painted a similarly strong picture. That figure dropped to 203,250, the lowest in 11 months.

The start of the year is usually a time when seasonal factors skew weekly readings of initial applications, said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets LLC.

“I would not take this result literally, but, at a minimum, it seems clear that layoffs remain quite low and are not trending higher in a meaningful way,” he wrote in a note.

The U.S. job market has defied economists’ forecasts in the past year, remaining robust despite elevated interest rates and helping keep a lid on unemployment.

Other reports point to some moderation in the labor market, including the latest survey of regional business contacts from the Federal Reserve this week. As Fed officials contemplate cutting interest rates this year, they will be looking for further signs of a slowdown.

The unadjusted data on initial claims, which doesn’t take into account seasonal influences, dropped by nearly 30,000, to 289,228. While New York made up more than half of that decline, applications in Michigan and Wisconsin also fell.

Workers in New York City can apply for benefits during winter and spring breaks, which makes the numbers for the state more volatile during those times, Eliza Winger, an economist at Bloomberg Economics, said in a note.

A separate report Thursday showed that applications to build new homes rose in the final month of the year, indicating optimism about future demand. Starts, however, declined, dragged down by a drop in single-family home construction.

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