US jobless claims at nine-month low

New US claims for unemployment benefits dropped to a nine-month low last week, a government report showed Thursday, suggesting a labour market recovery was gaining momentum. Initial claims for state unemployment benefits fell 23,000 to a seasonally adjusted 381,000, the Labour Department said, the lowest since late February. Economists had expected a smaller fall, to 395,000.
---- Four-week average lowest since April
---- Continuing claims tumble to 3-year low
The report, coming after data last week showing a rise in hiring and a sharp drop in the unemployment rate to a 2-1/2-year low of 8.6 percent in November, pointed to some strengthening in a sector that has been the Achilles heel of the economy's recovery.
It was the latest sign of acceleration in economic growth in the current quarter after output expanded at a 2.0 percent annual rate in the July-September period. "It looks as if the US labour market does not know how to spell the words euro contagion," said Cary Leahey, economist at Decision Economics in New York. "This is a good report ... adds to the sense that the job market continues to brighten, though very slowly."
The US economy is relatively strong as much of the global economy is slowing and parts of the eurozone are already in recession, prompting the European Central Bank to cut interest rates by a quarter of a percentage point a record low 1 percent Thursday.
The pickup in the US labour market could improve President Barack Obama's prospects of winning a second term in what is shaping up to be a tough election next November. However, many analysts believe US growth will lose a step in the New Year as the slowdown in Europe begins to weigh.
"The downtrend in claims remains intact, reinforcing the improving underlying fundamentals in the US economy which now looks to be outperforming most regions of the world, including China on a relative basis," said Eric Green, chief economist at TD Securities in New York. Other data on Thursday showed a jump in US wholesale inventories in October, further boosting expectations of solid fourth-quarter growth.
Wholesale inventories climbed 1.6 percent, the Commerce Department said, after gaining 0.3 percent in September. Liquidation of inventories by businesses in the third quarter contributed to a slower pace of gross domestic product growth. The drop in claims last week more than unwound the prior two weeks' increase, and pulled them back below the 400,000 level usually associated with improving labour market conditions. A Labour Department official said there was nothing unusual in the state level data but noted that the labour market was now entering a period of seasonal layoffs. That could make claims in the coming weeks very volatile.
The four-week moving average of claims, considered a better measure of labour market trends, fell 3,000 to 393,250, the lowest since early April. The number of people still receiving benefits under regular state programs after an initial week of aid dropped 174,000 to 3.58 million in the week ended November 26, the lowest since mid-September 2008.
Economists had forecast so-called continuing claims falling to 3.70 million from a previously reported 3.74 million. The number of Americans on emergency unemployment benefits declined 178,610 to 2.79 million in the week ended November 19, the latest week for which data is available. A total of 6.57 million people were claiming unemployment benefits during that period under all programs, down 431,397 from the prior week.