U.S. labor market data supportive of rate hike

Thu Nov 12, 2015 1:12pm EST
 
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By Lucia Mutikani

WASHINGTON (Reuters) - New U.S. applications for unemployment benefits last week held steady at levels consistent with a strengthening labor market and job openings rose in September, encouraging signs for the Federal Reserve as it contemplates raising interest rates next month.

Labor market resilience, despite faltering global growth, underscores the U.S. economy's strong fundamentals.

"The jobs market continues to do well. We are very close to hitting full employment and that suggests the Fed has the green light to start raising rates," said Ryan Sweet, a senior economist at Moody's Analytics in Westchester, Pennsylvania.

Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 276,000 for the week ended Nov. 7, the Labor Department said on Thursday. Despite having risen above their average for October, claims are not too far from levels last seen in the early 1970s.

They have now held below the 300,000 threshold for 36 consecutive weeks, the longest stretch in years. Claims below this level are usually associated with a healthy jobs market.

The four-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, rose 5,000 to 267,750 last week, still close to a 42-year low.

Labor market strength, marked by a surge in job growth in October and a jobless rate that is now in a range many Fed officials see as consistent with full employment, has bolstered expectations of a liftoff in the U.S. central bank's benchmark overnight interest rate at the Dec. 15-16 policy meeting.

The Fed has kept its short-term interest rate near zero since December 2008. Last month, nonfarm payrolls recorded their largest gain since December 2014 and the unemployment rate fell to a 7-1/2-year low of 5.0 percent.   Continued...

 
A job seeker fills out papers at a military job fair in San Francisco, California, August 25, 2015.  REUTERS/Robert Galbraith