NEW YORK — Initial unemployment claims plunged by 43,000 to 265,000 in the week ending Jan. 24 to build on a smaller 9,000 decline revised to 308,000 (was 307,000) level for the previous week, RBC Economics reported today.
“This marked the lowest reading since April 2000 and was below market expectations for a 300,000 level, although difficulties seasonally adjusting the data in a week shortened by the Martin Luther King, Jr. Day holiday may have played a role in the decline,” said Nathan Janzen, an RBC economist.
The four-week moving average of initial claims, which normally helps smooth out some of the weekly volatility in the measure, moved lower for the first time in five weeks, slipping to 298,500 from 306,750 for the previous week. Continuing claims for the week ending January 17, 2015 declined by 71,000 to 2,385,000.
“Although the decline is likely, at least, in part related to difficulties seasonally adjusting the data around a holiday-shortened week, the drop in initial claims to its lowest level in almost 15 years in the latest week was encouraging, particularly given the modest drift higher in the four-week moving average of claims recently,” said Janzen.
“Initial claims are likely to reverse part of this morning’s reported decline going forward,” he explained. “However, our view remains that strength in demand, which was evident in solid growth in gross domestic product (GDP) in recent quarters, will continue to sustain improvement in labor markets.
“A modest upward drift in jobless claims, on a four-week moving average basis, during the January payroll employment survey week, and some expected payback after stronger than normal hiring for the holiday shopping season helped to boost employment growth to an average of 303,000 per month during December and November 2014,” said Janzen. “They also point to some slowing in employment growth in January 2015. However, we expect moderation is still at a solid 215,000 pace in the month that would still represent solid improving underlying trend in labor markets.”
SOURCE: RBC Economics press release