The number of Americans filing applications for unemployment benefits unexpectedly fell last week, pointing to strong labor market conditions despite signs that job growth was slowing.
While other data on Thursday showed an improvement in worker productivity in the fourth quarter, the trend remained sluggish. Labor costs continued to rise at a moderate pace in the last quarter, suggesting benign inflation pressures that support the Federal Reserve’s “patient” stance towards further interest rate increases this year.
Initial claims for state unemployment benefits slipped 3,000 to a seasonally adjusted 223,000 for the week ended March 2, the Labor Department said. Economists polled by Reuters had forecast claims would be unchanged at 225,000 in the latest 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 3,000 to 226,250 last week, the lowest level in a month.
The claims data has no bearing on February’s employment report, which is scheduled for release on Friday, as it falls outside the survey period. There are indications that employment growth is slowing after last year’s robust gains. Part of the moderation in job growth is because of a shortage of workers.
Recent Institute for Supply Management surveys showed measures of manufacturing and services sectors employment dropping in February. A report from the Fed on Wednesday showed “modest-to-moderate gains” in employment in a majority of the U.S. central bank’s districts in February.
The Fed’s “Beige Book” report of anecdotal information on business activity collected from contacts nationwide showed notable worker shortages in information technology, manufacturing and construction industries as well as trucking businesses and at restaurants.
The Fed said contacts reported labor shortages were restricting employment growth in some areas.
The pace of job growth, however, remains more than enough to keep pushing the unemployment rate down. According to a Reuters survey of economists, nonfarm payrolls likely increased by 180,000 jobs in February after surging by 304,000 in January.
The unemployment rate is forecast to fall one-tenth of a percentage point to 3.9 percent in February.
The U.S. dollar extended gains after the release of the data on Thursday while U.S. stock index futures were little changed. Prices of U.S. Treasuries were trading higher.