Arab Times

US jobless claims drop to near 45-year low

Consumers boost borrowing by $18.4 bn

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WASHINGTON, Feb 8, (Agencies): The number of Americans filing for unemployme­nt benefits unexpected­ly fell last week, dropping to its lowest level in nearly 45 years as the labor market tightened further, bolstering expectatio­ns of faster wage growth this year.

The second straight weekly decline in claims reported by the Labor Department on Thursday also pointed to strong job growth momentum, which could further drive the unemployme­nt rate lower.

“The extremely low level of claims is a sign of tightness in the labor market and suggests that February is shaping up to be another solid month for job creation,” said John Ryding, chief economist at RDQ Economics in New York.

Initial claims for state unemployme­nt benefits decreased 9,000 to a seasonally adjusted 221,000 for the week ended Feb. 3, the Labor Department said. Claims fell to 216,000 in mid-January, which was the lowest level since January 1973. Economists polled by Reuters had forecast claims rising to 232,000 in the latest week. Last week marked the 153rd straight week that claims remained below the 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since 1970, when the labor market was much smaller.

The labor market is near full employment, with the jobless rate at a 17-year low of 4.1 percent. The tighter labor market is starting to exert upward pressure on wage growth. The Labor Department reported last week that average hourly earnings jumped 2.9 percent yearon-year in January, the largest gain since June 2009, after advancing 2.7 percent in December. Employers added 200,000 jobs to their payrolls last month.

Strong wage growth supports optimism among Federal Reserve officials that inflation will increase toward the US central bank’s 2 percent target this year. US financial markets expect the Fed will raise interest rates in March.

The Fed has forecast three rate increases for this year after lifting borrowing costs three times in 2017.

Prices for US Treasuries fell, with the yield on the benchmark 10-year note rising to a near four-year high also as the Bank of England said interest rates probably need to rise sooner. The dollar was little changed against a basket of currencies. Stocks on Wall Street were trading lower. “For Fed officials it is damn the torpedoes and plunging stock prices and keep with the game plan to raise rates gradually as the economy is showing increasing signs of overheatin­g,” said Chris Rupkey, chief economist at MUFG in New York. “The Fed may be out of step with current economic conditions and behind the curve.”

American consumers stepped up their borrowing by $18.4 billion in December, a solid performanc­e that followed a massive gain the previous month.

The increase reflects gains of $5.1 billion in the category that covers credit cards and $13.3 billion in the category for auto and student loans, the Federal Reserve reported Wednesday.

The overall increase followed a $31 billion surge in November as consumers took on extra credit to finance holiday shopping. Britain’s Prime Minister Theresa May (center left), speaks as she hosts a roundtable with Japanese investors in the UK inside 10 Downing Street in central London amid concerns that billions in investment are at risk because

of Brexit on Feb 8. (AP)

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