The number of Americans claiming unemployment benefit dipped in the last week of March in a further sign of the strong US labour market.
Jobless claims fell from a revised 259,000 in February to reach 234,000, the lowest for five weeks, according to the US Department of Labour.
This was well below the 250,000 consensus of economists’ predictions, adding to above-expectations data from payrolls provider ADP which showed more private sector jobs were added than forecast.
The upside surprises on both of the releases come before the crucial non-farm payrolls data, reported tomorrow. The US Federal Reserve carefully scrutinises the non-farm payrolls data in order to judge the state of the labour market.
On average economists expect the number of jobs added will retreat from a bumper 235,000 reading in February to only 180,000 in March.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: “The labor market is in good health, but most of the variation in payroll growth over the past year has been due to shifts in demand, rather than changes in the pace of layoffs.”
A sharp drop-off in the number of jobs added in the US private sector could suggest the economy is at full employment. The Federal Reserve’s judgement of how tight the labour market is will be a key variable in determining the pace of interest rate hikes as it continues to normalise monetary policy.
Andrew Hunter, an economist at Capital Economics, said: “With the economy close to full employment, the monthly gains of well above 200,000 seen over the past two months are unlikely to be sustained.”