(Reuters) – The number of Americans filing new claims for unemployment benefits fell last week from a seven-month high, pointing to continued improvement in labor market conditions.
Initial claims for state unemployment benefits slipped 10,000 to a seasonally adjusted 307,000 for the week ended Jan. 17, the Labor Department said on Thursday.
That reversed the bulk of the prior week’s increase which had pushed claims to their highest level since early June, but fell short of economists expectations for a 300,000 reading.
Economists had dismissed the prior week’s increase as “noise” given that claims data is difficult to adjust for seasonal variations around the holidays. Some, however, wondered if some of the elevation in claims reflected layoffs in the oil industry in the wake of plunging crude prices.
“It is unclear at this point whether or not this move up in the trend reflects issues seasonally adjusting the data around the holidays or if it represents a more meaningful deterioration in the labor market,” said Daniel Silver, an economist at JP Morgan in New York.
State-level data for the week ending Jan. 10 showed an increase in claims in the oil-producing states like Texas, Louisiana and North Dakota. But claims also rose in states such Missouri, Indiana and Illinois, which are not oil-dependent.
Oilfield service provider Baker Hughes Inc (BHI.N) this week announced it would cut 7,000 jobs, with most of the redundancies expected in the first quarter, because of slowing drilling activity. Schlumberger NV (SLB.N) has announced 9,000 job cuts.
Crude oil prices CLc1 LCOc1 have plunged almost 60 percent since June, hitting five-year lows as increased shale production in the United States and weak global demand has caused a glut on the market.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, increased 6,500 last week to 306,500, taking it above the 300,000 mark for the first time since September.
The claims data covered the week during which the government surveyed employers for January’s nonfarm payrolls.
Despite the gyrations in claims and the four-week average rising 7,750 between the December and January payroll survey periods, there is little doubt that the labor market is tightening.
Employment gains have exceeded 200,000 in each of the last 11 months, the longest stretch since 1994, and job openings are near 14-year highs. In addition, the ratio of unemployed people for every job opening is the lowest since early 2008.
The claims report showed the number of people still receiving benefits after an initial week of aid increased 15,000 to 2.44 million in the week ended Jan. 10.