US unemployment claims plunge by 28,000
US initial claims for unemployment insurance plunged in the final week of 2016, while private-sector firms hired at a slower pace in December, according to two reports Thursday.
The new data gave a fairly upbeat picture of the labor market just a day before the release of the closely watched US jobs report for December, although analysts now say employment could come in lower than previously expected.
Jobless claims in the week ended December 31 dropped by 28,000 to 235,000, according to the weekly report from the Labor Department.
That was the year’s biggest drop, which put the level well below analyst expectations for 265,000 initial claims.
Claims have been below 300,000 for 96 consecutive weeks, the longest streak since 1970.
The more stable four-week moving average slipped 5,750 to 256,750. The weekly data tend to be volatile, especially around year’s end, and some analysts expect a rebound in the next report.
In a separate report, the ADP payroll firm said American firms added 153,000 non-farm jobs in the final month of the year — below the 215,000 hired in November and short of the consensus estimate for a 170,000 increase.
But the gain was all in services, while manufacturing jobs declined for sixth time in the year.
Typically seen as a preview of the official monthly US employment data, the ADP report said goods-producing industries shed 16,000 jobs, including a 9,000-job decline in manufacturing.
However, services hiring jumped by 169,000 jobs, including 82,000 added in trade, transportation and utilities, and 29,000 in education and health.
The private sector generated an average of 174,000 jobs a month last year, down from 209,000 in 2015, ADP Research Institute chief Ahu Yildirmaz said.
However, “the US labor market has experienced unprecedented seven years of growth that has brought us to near full employment,” he said, adding that the tightening labor market will likely slow the growth this year.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said higher jobless claims in the month, accompanied by higher oil prices, probably account for the slower hiring, prompting him to lower his forecast for December employment.
Still, “we expect a clear acceleration in payrolls” in the first quarter, he said.
The consensus forecast for employment prior to the release of Thursday’s data was for a gain of 175,000 in December. The government report includes private and public hiring.
However, Jim O’Sullivan, chief US economist at High Frequency Economics, expects job gains of just 150,000 in the month, based on the recent jobless claims data.
Still, he said, “we believe the trend in employment growth remains quite strong — more than strong enough to keep the unemployment rate trending down.”
US unemployment currently stands at 4.6 percent.