The number of U.S. jobless claims dropped last week from the highest level in seven months, indicating that the labor market is improving.
Fresh applications for state unemployment benefits plunged 10,000 to 307,000 in the week through Jan. 17, reported the Labor Department on Thursday. This pared much of last week’s increase that saw claims peak the most since early June, though it failed to meet analysts’ forecast of a 300,000 reading.
Most economists had shrugged away last week’s jump in unemployment benefits applications as “noise” owing to the fact that it is tough to adjust claims data for seasonal changes during the holidays. However, some analysts questioned whether the spike in claims was due to dismissals in the oil industry, which is reeling from falling 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,” Daniel Silver, a New York-based economist at JP Morgan, told Reuters.
State data in the week through Jan. 10 indicated that claims rose in oil-rich zones such as Louisiana, North Dakota and Texas, though claims also increased in non-oil producing areas such as Illinois, Missouri and Indiana.
Major oilfield firms such as Schlumberger NV and Baker Hughes Inc have announced plans to lay off staff. Schlumberger has announced it will cut 9,000 jobs, while Baker Hughes has announced 7,000 job cuts, with most of the layoffs projected to occur in the first quarter owing to slowdown in drilling activity. The falling crude prices have been attributed to global supply glut owing to increased U.S. shale production. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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