The number of people filing initial applications for U.S. state unemployment benefits fell last week from a five-month high, the government reported Thursday, suggesting sustained labor-market improvement that could lead to further Federal Reserve (Fed) interest-rate increases next year. The Labor Department said jobless claims fell 11,000 last week to 271,000. It was the 41st consecutive week that claims remained below 300,000, a level associated with healthy labor-market conditions. It is the longest such stretch since the early 1970s. The four-week moving average of jobless claims—a better gauge of trends because it smoothes weekly volatility—was virtually unchanged, also at 271,000. The four-week average fell slightly between November and December, suggesting another strong month of job gains after payrolls increased by 211,000 in November, and unemployment remained at a seven-year low of 5 percent. As the labor market approaches full employment, jobless claims likely have little room for further declines. The Fed on Wednesday raised its key interest rate by a quarter-point to between 0.25 and 0.50 percent, the first increase in almost a decade. The central bank said in its policy statement that there had been "further improvement" in the labor market.
