The number of Americans filing for unemployment benefits dropped more than expected last week, nearing a 42-year low as labor market conditions continued to tighten in a boost to the economy.
According to the Labor Department, initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 267,000 for the week ending Dec.19, not far from levels last seen in late 1973.
Over the past 12 months, the number of people collecting benefits has dropped 7.7 percent to 2.2 million. Applications for benefits are often a proxy for layoffs, so the decline indicates that employers are holding onto their workers and potentially looking to expand their payrolls.
Claims have been below the critical threshold of 300,000 for the past 42 weeks, a level that generally points to monthly job gains in excess of 200,000. Indeed, according to the numbers, employers have been hiring an additional 210,000 workers a month so far this year. And unemployment last month remained at a seven-year low of 5 percent.
More Confidence
Employers and consumers have regained a level of confidence and seem to have recovered from the most recent recession. Americans have stepped up their purchases of cars, homes and are eating out more, and the economy has consistently added jobs even as the rest of the global economy struggles.
The strength in the labor market is helping to buttress consumer spending while supporting the economy as it deals with a strong dollar and slowing down global growth.
Despite the strong figures, some analysts attribute the decline in unemployment numbers last week to difficulties adjusting the figures during the holidays.