Drop in jobless claims points to labor market strength

Thu Oct 9, 2014 3:30pm EDT
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By Jason Lange

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits fell last week to nearly its lowest level since before the 2007-09 recession, a sign of growing steam in the U.S. labor market.

Initial claims for state unemployment benefits dropped 1,000 to a seasonally adjusted 287,000 in the week ended Oct. 4, the Labor Department said on Thursday. Economists had expected claims to rise.

The data adds to the view that strength is building in the U.S. economy. "The labor market is entering into a potential boom," said Joseph LaVorgna, chief U.S economist at Deutsche Bank in New York.

Still, Federal Reserve officials remain concerned about persistently low rates of inflation and are not seen in a rush to hike interest rates with the economies of key trading partners flagging.

A separate report showed U.S. wholesale inventories rose by the most in four months in August, a sign the economy may have grown more than expected in the third quarter.

Many economists think the economy grew at an annual rate of around 3 percent in the July-September period, much faster than average rates over the last few years.

U.S. stocks opened lower as investors took profits after a big rally on Wednesday that had been fueled by minutes of the Fed's last policy meeting, which suggested an interest rate hike could be delayed because of growing concerns on the international outlook.

The U.S. dollar, which had been on a long run up through last week, slid to a three-week low against the Japanese yen on Thursday, while yields on U.S. government debt rose modestly.   Continued...

A job-seeker completes an application at a career fair held by civil rights organization National Urban League as part of its annual conference, in Philadelphia July 25, 2013.  REUTERS/Mark Makela