US jobless claims fall as last US jobs data before Fed meeting supports rate rise case

 
Jasper Jolly
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The US jobs market has been steadily strengthening since the financial crisis (Source: Getty)

Claims by Americans for unemployment benefits fell this week, adding to the weight of positive economic data in the last jobs release ahead of next week’s update on monetary policy by the US Federal Reserve.

The number of initial jobless claims fell by 10,000 to 258,000, marking the longest streak of claims below 300,000 since 1972, according to the US Department of Labor.

The total number of jobless claims fell by 79,000 to 2,005,000. This sent the insured unemployment rate down by 0.1 percentage points to 1.4 per cent. A continuation of recent trends would send jobless claims consistently below two million for the first time in over a decade.

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The figures continue strong downward trends in recent months as the weight of data increasingly shows an improvement in the economic health of the US as Donald Trump prepares to take office in January.

The decreasing rate adds weight to the case for the Federal Reserve’s Open Market Committee (FOMC) to raise interest rates as it starts to move away from historically low levels.

Investors have taken an rate rise at the meeting next week as all but a certainty, with attention turning to the prospect of further tightening over the course of 2017.

FOMC chair Janet Yellen has in recent weeks paved the way for a rate rise “relatively soon”, but with the important caveat that economic data would have to support the rise. There has been little data in the past few weeks to weaken the case for a rise.

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