US jobless claims plunge to 15-year low

The number of Americans filing new claims for unemployment benefits tumbled last week to its lowest level in nearly 15 years, adding to bullish signals on the labor market.

Though the decline probably exaggerates the jobs market's strength given a holiday-shortened week, Thursday's report suggested that some economic indicators continue to show a rebounding economy and that the country is successfully weathering weakening global demand.

Initial claims for state unemployment benefits dropped 43,000 to a seasonally adjusted 265,000 for the week ended Jan. 24, the lowest since April 2000, the Labor Department said. It was the biggest weekly decline since November 2012.

The drop exceeded economists' expectations for a fall to only 300,000, but last week also included the Martin Luther King holiday, which means fewer claims were likely processed. That could have delayed the processing of some applications, a Labor Department spokesman said. The unemployed can apply for benefits online, though they are typically less likely to do so on a holiday. That suggests applications could rise next week.

The fall unwound the prior weeks' increases, which had pushed claims above the key 300,000 threshold. Economists had largely dismissed that rise as "noise," given difficulties adjusting the data for seasonal fluctuations at the start of the year, which can include layoffs of temporary employees hired by retailers and restaurants for the winter holidays.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 8,250 last week to 298,500.

Employers added almost 3 million jobs last year, the most since 1999. Better economic growth has encouraged companies to add more workers.

"This is good news," said Jennifer Lee, an economist at BMO Capital Markets. "But it was also a holiday-shortened week, so there could be a special factor perhaps artificially deflating the number. A partial reversal next week ... should still show an improving labor market."

Applications have been near or below 300,000 since September. That suggests companies are confident enough in the economy to hold onto their staffs.

Last year's robust hiring means that more Americans are earning paychecks than a year ago. That should boost consumer spending and help power faster economic growth this year. Most economists forecast growth will top 3 percent in 2015 for the first time in a decade.

Yet wage growth has lagged behind hiring. Average wages increased only 1.7 percent in 2014. That's down from 1.9 percent in 2013 and much lower than the 3.5 percent to 4 percent that is consistent with a healthy economy.

Al Jazeera and wire services