Tag Archives: labor market

U.S. job growth cools as labor market nears full employment; wages rise

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth slowed more than expected in December amid a decline in retail employment, but a pick-up in monthly wage gains pointed to labor market strength that could pave the way for the Federal Reserve to increase interest rates in March.

Nonfarm payrolls increased by 148,000 jobs last month after surging by 252,000 in November, the Labor Department said on Friday. Retail payrolls decreased by 20,300 in December, the largest drop since March, despite reports of a strong holiday shopping season.

The unemployment rate was unchanged at a 17-year low of 4.1 percent. Economists polled by Reuters had forecast payrolls rising by 190,000 in December. The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

“We do not think that today’s employment report will keep the Federal Reserve from tightening again at the March policy meeting, given other strong recent economic data,” said David Berson, chief economist at Nationwide in Columbus, Ohio.

Job growth surged in October and November after being held back in September by back-to-back hurricanes, which destroyed infrastructure and homes and temporarily dislocated some workers in Texas and Florida.

Taking some sting out of the moderation in job gains, average hourly earnings rose 9 cents, or 0.3 percent, in December after a 0.1 percent gain in the prior month. That lifted the annual increase in wages to 2.5 percent from 2.4 percent in November.

Prices of U.S. Treasuries were mostly flat while the U.S. dollar <.DXY> was slightly stronger against a basket of currencies. U.S. stock indexes opened at fresh record highs.

Employment gains in December were below the monthly average of 204,000 over the past three months. Job growth is slowing as the labor market nears full employment, but could get a temporary boost from a $1.5 trillion package of tax cuts passed by the Republican-controlled U.S. Congress and signed into law by President Donald Trump last month.

The lift from the fiscal stimulus, which includes a sharp reduction in the corporate income tax rate to 21 percent from 35 percent, is likely to be modest as the stimulus is occurring with the economy operating almost at capacity. There are also concerns the economy could overheat.

“With the tax cuts we get solid GDP growth in the near-term and then a fiscal hangover, which will likely put the economy at a greater risk of recession,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.

NEAR FULL EMPLOYMENT

Data ranging from housing to manufacturing and consumer spending have suggested solid economic growth in the fourth quarter, despite a widening of the trade deficit in both October and November, which could subtract from gross domestic product.

In a separate report on Friday, the Commerce Department said the trade gap widened 3.2 percent in November to $50.5 billion, the highest level since January 2012.

The deficit was boosted by record high imports, which offset the highest exports in three years. The economy grew at a 3.2 percent annualized rate in the third quarter.

For all of 2017, the economy created 2.1 million jobs, below the 2.2 million added in 2016. Economists expect job growth to slow further this year as the labor market hits full employment, which will likely boost wage growth as employers compete for workers.

Economists are optimistic that annual wage growth will top 3.0 percent by the end of this year. The December employment report incorporated annual revisions to the seasonally adjusted household survey data going back five years.

There was no change in the unemployment rate, which declined by seven-tenths of a percentage point last year.

Economists believe the jobless rate could drop to 3.5 percent by the end of this year. That could potentially unleash a faster pace of wage growth and translate into a much stronger increase in inflation than currently anticipated.

That, according to economists, would force the Fed to push through four interest rate increases this year instead of the three it has penciled in. The U.S. central bank raised borrowing costs three times in 2017.

“If the unemployment rate declines and wages rise faster, which is likely, the Fed is going to start worrying about wage inflation,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

Employment gains were largely broad-based in December. Construction payrolls increased by 30,000 jobs, the most since February, reflecting recent strong increases in homebuilding. Manufacturing employment increased by 25,000 jobs.

Manufacturing is being supported by a strengthening global economy and a weakening dollar. Employment in the utilities sector fell for a second straight month.

General merchandise stores payrolls tumbled by 27,300 in December, with employment at clothing stores dropping by 3,800 jobs.

For all of 2017, retail employment dropped by 67,000 jobs after rising by 203,000 in 2016. Further job losses are likely this year as major retailers, facing stiff competition from online sellers like Amazon.com Inc <AMZN.O>, close stores.

Sears Holdings Corp said on Thursday it was shuttering 103 unprofitable Kmart and Sears stores. Macys Inc also announced 11 store closures, which could leave 5,000 workers unemployed.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. stocks open higher after strong private jobs data

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 31, 2017. REUTERS/Brendan

By Sweta Singh

(Reuters) – U.S. stocks were higher on Thursday after better-than-expected private sector hiring showed that the labor market continues to strengthen, further boosting chances of a rate hike by the Federal Reserve later this month.

The ADP private sector employment report showed that 253,000 jobs were added in May, well above the 185,000 jobs estimated by economists polled by Reuters.

The report by payrolls processor ADP acts as a precursor to the much-awaited nonfarm payrolls data, due on Friday, that includes hiring in both the public and private sectors.

“I think the Fed has already made up its mind. Unless we have a real weak employment data tomorrow I think it’s a go-ahead for the Fed to raise rates in June,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

San Francisco Federal Reserve Bank President John Williams said on Wednesday he sees a total of three interest rate increases for this year as his baseline scenario, but views four hikes as also being appropriate if the U.S. economy gets an unexpected boost.

Forecasts from Fed officials suggest that a median of two more hikes are planned before the end of the year.

Traders priced in an 89 percent chance of a rate hike in the upcoming Fed meeting on June 14, according to Thomson Reuters data.

At 9:52 a.m. ET the Dow Jones Industrial Average was up 21.5 points, or 0.1 percent, at 21,030.15, the S&P 500 was up 6.16 points, or 0.25 percent, at 2,417.96 and the Nasdaq Composite was up 26.51 points, or 0.43 percent, at 6,225.03.    Seven of the 11 major S&P 500 sectors were higher, with the health and technology sectors leading the gainers.

The Institute for Supply Management is likely to report that its national manufacturing index slipped to 54.5 in May from 54.8 in April. The data is expected at 10:00 ET.

“We have a multitude of macro news coming out today and that will set the tone for the market’s direction … I think we are looking at another trying session,” Cardillo said.

Deere’s shares were up 1.9 percent at $124.74 after the farm and construction major said it would buy privately held German road construction company Wirtgen Group for $5.2 billion, including debt.

Goodyear Tire’s shares were up 5.7 percent at $34.03 after Morgan Stanley raised its rating to “overweight” from “underweight”.

Box Inc was up 3.9 percent at $19.40 after the cloud storage firm’s quarterly earnings edged ahead of Wall Street analysts’ expectations.

Advancing issues outnumbered decliners on the NYSE by 1,931 to 657. On the Nasdaq, 1,707 issues rose and 624 fell.

The S&P 500 index showed 28 new 52-week highs and 11 new lows, while the Nasdaq recorded 82 new highs and 70 new lows.

(Reporting by Sweta Singh in Bengaluru; Editing by Saumyadeb Chakrabarty and Anil D’Silva)

U.S. job growth rebounds sharply, unemployment rate hits 4.4 percent

A job seeker fills out an application at the King Soopers grocery store table at a job fair at the Denver Workforce Center in Denver, Colorado, U.S. February 15, 2017. REUTERS/Rick Wilking

By Lucia Mutikani

WASHINGTON – U.S. job growth rebounded sharply in April and the unemployment rate dropped to a near 17-year low of 4.4 percent, signs of a tightening labor market that could seal the case for an interest rate increase next month despite moderate wage growth.

Nonfarm payrolls jumped by 211,000 jobs last month, the Labor Department said on Friday, well above the monthly average of 185,000 for this year and a jump from the gain of 79,000 in March.

Job gains were driven by a surge in hiring in the leisure and hospitality sector as well as business and professional services.

The drop of one-tenth of a percentage point in the unemployment rate took it to its lowest level since May 2007.

The decline reflected both an increase in hiring and people leaving the labor force.

The labor force participation rate, or the share of

working-age Americans who are employed or at least looking for a job, fell to 62.9 percent from an 11-month high of 63 percent.

The rebound in hiring supports the Federal Reserve’s contention that the pedestrian 0.7 percent annualized economic growth pace in the first quarter was likely “transitory,” and its optimism that economic activity would expand at a “moderate”

pace.

The Fed on Wednesday kept its benchmark overnight interest rate unchanged and said it expected labor market conditions would “strengthen somewhat further.”

The U.S. central bank raised its overnight interest rate by a quarter of a percentage point in March and has forecast two more increases this year.

Average hourly earnings rose seven cents, or 0.3 percent, last month, partly because of a calendar quirk. While that lowered the year-on-year increase to 2.5 percent, the lowest since August 2016, there are signs that wage growth is accelerating as labor market slack diminishes.

A government report last week showed private sector wages recorded their biggest gain in 10 years in the first quarter.

NEAR FULL EMPLOYMENT

The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population. Job growth averaged 178,000 per month in the first quarter.

With the labor market expected to hit a level consistent with full employment this year, payroll gains could slow amid growing anecdotal evidence that firms are struggling to find qualified workers.

Construction payrolls rose 5,000 last month and manufacturing employment advanced by 6,000 jobs. Leisure and hospitality payrolls jumped by 55,000 in April. Professional and business services payrolls rose by 39,000.

Retail payrolls gained 6,300 after two straight months of declines. Retailers including J.C. Penney Co Inc <JCP.N>, Macy’s Inc <M.N> and Abercrombie & Fitch <ANF.N> have announced thousands of layoffs as they shift toward online sales and scale back on brick-and-mortar operations.

Government payrolls jumped 17,000 last month.

Other labor market measures also showed strength last month.

A broad measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped to 8.6 percent from 8.9 percent in March.

The employment-to-population ratio rose one-tenth of percentage point to a fresh eight-year high of 60.2 percent.

((Reporting by Lucia Mutikani; Editing by Paul Simao))

Pending home sales surge to 10-month high

A home for sale sign hangs in front of a house in Oakton in Virginia March 27, 2014. REUTERS/Larry Downing

WASHINGTON (Reuters) – Contracts to buy previously owned U.S. homes jumped to a 10-month high in February, pointing to robust demand for housing ahead of the spring selling season despite higher prices and mortgage rates.

The National Association of Realtors said on Wednesday its Pending Home Sales Index, based on contracts signed last month, surged 5.5 percent to 112.3, the highest reading since April. It was also the second best reading since May 2006.

Contract signing last month was likely boosted by unseasonably warm temperatures. The gains reversed January’s 2.8 percent drop. Pending home contracts become sales after a month or two, and last month’s surge implied a pickup in home resales after they tumbled 3.7 percent in February.

Economists had forecast pending home sales rising 2.4 percent last month. Pending home sales increased 2.6 percent from a year ago.

Demand for housing is being driven by the labor market, which is generating wage increases, as it nears full employment. Sales activity, however, remains constrained by tight inventories, which are driving up home prices.

Given labor market strength, economists expect only a modest impact from higher mortgage rates. The 30-year fixed mortgage rate is currently at 4.23 percent, below a more than 2-1/2-year high of 4.32 percent hit in December.

Contracts increased 3.4 percent in the Northeast and jumped 3.1 percent in the West. They surged 11.4 percent in the Midwest and rose 4.3 percent in the South.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

U.S. weekly jobless claims rise; layoffs fall in February

Hundreds of job seekers wait in line with their resumes to talk to recruiters at the Colorado Hospital Association health care career fair in Denver April 9, 2013. REUTERS/Rick Wilking

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits last week rebounded from a near 44-year low, but the labor market continues to tighten amid a sharp drop in job cuts in February.

Initial claims for state unemployment benefits rose 20,000 to a seasonally adjusted 243,000 for the week ended March 4, the Labor Department said on Thursday. Claims for the prior week were unrevised at 223,000, the lowest level since March 1973.

It was the 105th straight week that claims remained below 300,000, a threshold associated with a healthy labor market.

That is the longest stretch since 1970, when the labor market was much smaller.

Economists polled by Reuters had forecast new claims for unemployment benefits rising to 235,000 in the latest week. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 2,250 to 236,500 last week.

In a separate report, global outplacement firm Challenger, Gray & Christmas said U.S.-based employers announced 36,957 job cuts in February, down 19 percent from January. The retail sector continued to dominate layoffs last month as it shifts toward online and scales back on brick-and-mortar operations.

JC Penney <JCP.N> topped the list, announcing 5,500 job cuts as a result of 140 store closures.

U.S. Treasuries were little changed on the data. The dollar fell to a session low against a basket of currencies as the European Central Bank pledged to keep its aggressive stimulus policy at least until the end of the year.

NEAR FULL EMPLOYMENT

The labor market is at or close to full employment, with employers increasingly reporting difficulties finding qualified workers for open job positions. Labor market tightness together with firming inflation could allow the Federal Reserve to raise interest rates as early as next week.

Fed Chair Janet Yellen signaled last week that the U.S. central bank would likely raise rates at its March 14-15 policy meeting. The Fed raised its benchmark overnight rate in December and has forecast three rate increases for 2017.

The labor market strength comes despite the economy showing signs of fatigue early in the first quarter. Data on trade, consumer, business and construction spending were soft in January, leaving the Atlanta Fed forecasting GDP increasing at a 1.2 percent rate in the first quarter.

The economy grew at a 1.9 percent annualized rate in the fourth quarter, slowing from the third quarter’s brisk 3.5 percent pace.

The claims report has no bearing on February’s employment report, which is scheduled for release on Friday, as it falls outside the survey period. First-time applications for jobless benefits declined in February, suggesting another month of strong employment growth.

According to a Reuters survey of economists, nonfarm payrolls probably increased by 190,000 jobs last month after surging 227,000 in January. The unemployment rate is forecast falling one-tenth of a percentage point to 4.7 percent.

But payrolls could surprise on the upside after a report on Wednesday showed private sector employers hired 298,000 workers in February, the largest amount in a year.

In another report on Thursday, the Labor Department said import prices rose 0.2 percent last month after advancing 0.6 percent in January. It was the third straight monthly increase.

In the 12 months through February, import prices accelerated 4.6 percent, the largest gain since February 2012, after rising 3.8 percent in January.

Import prices excluding fuels rose 0.3 percent, the first increase since July, after slipping 0.1 percent in January.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. jobless claims near 44-year-low as labor market tightens

Legal firm Hogan Lovells representative Nina LeClair (2nd R) talks to U.S. military veteran applicants (L) at a hiring fair for veteran job seekers and military spouses at the Verizon Center in Washington April 9, 2014. REUTERS/Gary Cameron

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits fell to near a 44-year-low last week, pointing to further tightening of the labor market even as economic growth appears to have remained moderate in the first quarter.

The stronger labor market combined with rising inflation could push the Federal Reserve to raise interest rates this month.

Initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 223,000 for the week ended Feb. 25, the lowest level since March 1973, the Labor Department said on Thursday. Data for the prior week was revised to show 2,000 fewer applications received than previously reported.

It was the 104th straight week that claims remained below 300,000, a threshold associated with a healthy labor market. That is the longest stretch since 1970, when the labor market was much smaller. It is now at or close to full employment, with an unemployment rate of 4.8 percent.

Economists polled by Reuters had forecast new claims for unemployment benefits dipping to 243,000 in the latest week. Financial markets are already pricing in a rate hike at the Fed’s March 14-15 policy meeting.

U.S. stock index futures rose after the data on Thursday. The U.S. dollar <.DXY> also firmed against a basket of currencies, while prices for U.S. government debt fell.

A survey from the U.S. central bank on Wednesday showed the labor market remained tight in early 2017, with some of the Fed’s districts reporting “widening” labor shortages.

The government reported on Wednesday that the personal consumption expenditures (PCE) price index jumped 1.9 percent in the 12 months through January, the biggest gain since October 2012. The PCE price index increased 1.6 percent in December.

The core PCE, the Fed’s preferred inflation measure, increased 1.7 percent, still below its 2 percent target.

TEPID GROWTH

A Labor Department analyst said there were no special factors influencing last week’s claims data. Only claims for Oklahoma were estimated.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 6,250 to 234,250 last week, the lowest reading since April 1973.

Data this week showed tepid growth in consumer spending in January, weak equipment and construction spending, and a wider goods trade deficit, suggesting the economy struggled to gain momentum early in the first quarter after slowing in the final three months of 2016.

The Atlanta Fed is forecasting first-quarter gross domestic product rising at a 1.8 percent annualized rate. The economy grew at a 1.9 percent pace in the fourth quarter.

Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid increased 3,000 to 2.07 million in the week ended Feb. 18. The four-week average of the so-called continuing claims edged up 750 to 2.07 million.

The continuing claims data covered the survey week for February’s unemployment rate. The four-week moving average of claims fell 21,500 between the January and February survey periods, suggesting an improvement in the jobless rate.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. weekly jobless claims rise less than expected

leaflet at job fair

WASHINGTON – The number of Americans filing for unemployment benefits increased less than expected last week, a sign that the labor market was continuing to tighten.

Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 239,000 for the week ended Feb. 11, the Labor Department said on Thursday.

Data for the prior week was unrevised.

Claims have been below 300,000, a threshold associated with a strong labor market, for 102 consecutive weeks.

That is the longest stretch since 1970, when the labor market was much smaller.

The labor market is at or close to full employment, with the unemployment rate at 4.8 percent.

Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 245,000 in the latest week.

A Labor Department analyst said there were no special factors influencing last week’s data and no states had been estimated.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, edged up 500 to 245,250 last week.

The claims report also showed the number of people still receiving benefits after an initial week of aid slipped 3,000 to 2.08 million in the week ended Feb. 4.

The four-week average of the so-called continuing claims rose 4,250 to 2.08 million.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

 

U.S. jobless claims drop to near 43-year low

Applicants fill out forms at job fair

WASHINGTON, Feb 9 (Reuters) – The number of Americans filing for unemployment benefits unexpectedly fell last week to near a 43-year low, amid a further tightening of the labor market that could eventually spur faster wage growth.

Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 234,000 for the week ended Feb. 4, the Labor Department said on Thursday. That left claims just shy of the 43-year low of 233,000 touched in early November.

Claims have now remained below 300,000, a threshold associated with a strong labor market, for 101 straight weeks.

That is the longest stretch since 1970, when the labor market was much smaller.

The labor market is at or close to full employment, with the unemployment rate at 4.8 percent. It hit a nine-year low of 4.6 percent in November.

Further tightening in labor market conditions could boost wage growth, which has remained stubbornly sluggish despite anecdotal evidence of more companies struggling to find qualified workers.

Lackluster wage growth, if sustained, could hurt consumer spending and crimp economic growth. Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 250,000 in the latest week.

A Labor Department analyst said there were no special factors influencing last week’s data and no states had been estimated.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 3,750 to 244,250 last week, the lowest level since November 1973.

The claims report also showed the number of people still receiving benefits after an initial week of aid increased 15,000 to 2.08 million in the week ended Jan. 28. The four-week average of the so-called continuing claims fell 3,750 to 2.08 million.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters

Messaging: lucia.mutikani.thomsonreuters.com@reuters.net))

Job growth slows, but wages rebound strongly

People wait in line for job fair

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. employment increased less than expected in December but a rebound in wages pointed to sustained labor market momentum that sets up the economy for stronger growth and further interest rate increases from the Federal Reserve this year.

Nonfarm payrolls increased by 156,000 jobs last month, the Labor Department said on Friday. The gains, however, are more than sufficient to absorb new entrants into the labor market.

Fed Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with growth in the work-age population. Employers hired 19,000 more workers than previously reported in October and November.

“Job creation and overall labor market conditions remain solid. With the potential for stronger fiscal stimulus in the form of infrastructure spending and tax cuts, job creation appears likely to remain on a solid footing in 2017,” said Jim Baird, chief investment officer for Plante Moran Financial Advisors in Kalamazoo, Michigan.

The economy created 2.16 million jobs in 2016. Average hourly earnings increased 10 cents or 0.4 percent in December after slipping 0.1 percent in November. That pushed the year-on-year increase in earnings to 2.9 percent, the largest gain since June 2009, from 2.5 percent in November.

While the unemployment rate ticked up to 4.7 percent from a nine-year low of 4.6 percent in November that was because more people entered the labor force, a sign of confidence in the labor market.

The employment report added to data ranging from housing to manufacturing and auto sales in suggesting that President-elect Donald Trump is inheriting a strong economy from the Obama administration. The labor market momentum is likely to be sustained amid rising business and consumer confidence.

Trump, who takes over from President Barack Obama on Jan. 20, has pledged to increase spending on the country’s aging infrastructure, cut taxes and relax regulations. These measures are expected to boost growth this year.

But the proposed expansionary fiscal policy stance could increase the budget deficit. That, together with faster economic growth and a labor market that is expected to hit full employment this year could raise concerns about the Fed falling behind the curve on interest rate increases.

The U.S. central bank raised its benchmark overnight interest rate last month by 25 basis points to a range of 0.50 percent to 0.75 percent. The Fed forecast three rate hikes this year.

The dollar rose against a basket of currencies on the employment data, while U.S. government bonds were trading lower. U.S. stock index futures rose.

FACTORY JOBS RISE

Economists had forecast payrolls rising by 178,000 jobs last month and the unemployment rate ticking up one tenth of a percentage point to 4.7 percent.

A broad measure of unemployment that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment fell one-tenth to a more than 8-1/2-year low of 9.2 percent.

Employment growth in 2016 averaged 180,000 jobs per month, down from an average gain of 229,000 per month in 2015. The slowdown in job growth is consistent with a labor market that is near full employment.

There has been an increase in employers saying they cannot fill vacant positions because they cannot find qualified workers. The skills shortage has been prominent in the construction industry.

Even as the labor market tightens, there still remains some slack. The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, rose one-tenth of percentage point to 62.7 percent in December.

The participation rate remains near multi-decade lows. Some of the decline reflects demographic changes.

December’s job gains were broad, with manufacturing payrolls rising 17,000 after declining for four straight months. Construction payrolls fell 3,000 in December after three consecutive months of increases.

Retail sector employment rose 6,300 after increasing 19,500 in November. Department store giants Macy’s <M.N> and Kohl’s Corp <KSS.N> this week reported a drop in holiday sales. Macy’s said it planned to cut 10,000 jobs beginning this year.

Department stores have suffered from stiff competition from online rivals including Amazon.com <AMZN.O>. Temporary help declined 15,500 last month, the biggest drop since January.

Education and health services employment rose 70,000, the biggest increase since February. Government employment increased 12,000 in December.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Jobless claims fall to near 43-year low

Job seekers

WASHINGTON, Jan 5 (Reuters) – The number of Americans filing for unemployment benefits fell to near a 43 year-low last week, pointing to further tightening in the labor market.

Initial claims for state unemployment benefits dropped 28,000 to a seasonally adjusted 235,000 for the week ended Dec. 31, the Labor Department said on Thursday. That was close to the 233,000 touched in mid-November, which was the lowest level since November 1973.

Claims for the prior week were revised to show 2,000 fewer applications received than previously reported. But with claims data for six states and one territory estimated because of the New Year’s holiday, last week’s drop likely exaggerates the labor market’s strength.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 5,750 to 256,750 last week.

Claims have now been below 300,000, a threshold associated with a healthy labor market, for 96 consecutive weeks. That is the longest stretch since 1970, when the labor market was much smaller.

The labor market is considered to be at or near full employment, with the jobless rate at a nine-year low of 4.6 percent. Tightening labor market conditions and gradually firming inflation allowed the Federal Reserve to raise its benchmark overnight interest rate last month by 25 basis points to a range of 0.50 percent to 0.75 percent.

While the U.S. central bank forecast three rate hikes for 2017, minutes of the Dec. 13-14 policy meeting released on Wednesday suggested that the pace of increases would largely be determined by the labor market and fiscal policy.

Economists polled by Reuters had forecast first-time applications for jobless benefits falling to 260,000 in the latest week. Claims briefly pushed higher last month and in November, but economists blamed the gyrations on difficulties adjusting the data around moving holidays.

A Labor Department analyst said there were no special factors influencing last week’s data. That data has no bearing on December’s employment report, which is scheduled for release on Friday, as it falls outside the survey period.

According to a Reuters survey of economists, nonfarm payrolls likely increased by 178,000 jobs in December after the same gain in November.

Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid rose 16,000 to 2.11 million in the week ended Dec. 24. The four-week average of the so-called continuing claims increased 26,250 to 2.07 million.

(Reporting by Lucia Mutikani; Editing by Paul Simao)