US jobless claims data confirms overall downward trend

City A.M. Reporter
NEW US claims for jobless benefits moved higher last week, but a decline in the four-week average to a nearly two and a half-year low suggested the labour market continues to improve.

Initial claims for state unemployment benefits increased 18,000 to a seasonally adjusted 409,000, the Labor Department said, above economists' expectations for 400,000.

The data falls outside the survey period for the government's closely watched employment report for December, which on Friday is expected to show nonfarm payrolls jumped 175,000 after November's surprisingly small 39,000 gain.

The spike in claims does little to change perceptions the economy is now on a sustainable growth path, as flagged by sturdy data on consumer spending, trade and manufacturing.

Signs that the labour market is improving have been underscored by the four-week moving average of unemployment claims – a better measure of underlying trends – which fell 3,500 last week to 410,750, the lowest level since late July 2008.

"It's telling you very clearly that the employment side of the economy is picking up, it paints a pretty definite picture that layoffs are on the way down," said Steve Blitz, a senior economist at ITG Investment Research in New York.