The labor market is near full employment, with the jobless rate at a 17-year low of 4.1 percent. Tightening labor market conditions have raised optimism among Federal Reserve officials that inflation will increase towards the U.S. central bank’s 2 percent target this year.
The Fed on Wednesday left its benchmark overnight interest rate unchanged and described the labor market as having “continued to strengthen.” U.S. financial markets expect a rate increase in March. The Fed has forecast three rate increases for this year after lifting borrowing costs three times in 2017.
Last week, the four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 5,000 to 234,500, the lowest level since early November.
The claims data has no bearing on January’s employment report, which is scheduled to be released on Friday, as it falls outside the survey period. According to a Reuters survey of economists, nonfarm payrolls probably rose by 180,000 jobs in January after increasing by 148,000 in December.
The claims report also showed the number of people receiving benefits after an initial week of aid increased 13,000 to 1.95 million in the week ended Jan. 20. The four-week moving average of the so-called continuing claims rose 12,000 to 1.93 million.