First-time claims for unemployment benefits plunged to 235,000 in the second week of November, the lowest level since November of 1973, the Department of Labor reported Thursday.
The week’s steep decline in jobless claims defied forecasters’ expectations for a slight increase from 254,000 to around 257,000, adjusted for seasonal variations.
Thursday’s release is one more indication that President Obama is poised to hand off a near-healthy and improving labor market to President-Elect Trump, and that the economy is likely healthy enough to convince the Federal Reserve to tighten monetary policy. Fewer claims indicate a low pace of layoffs, and stronger net job growth.
Economists estimate that jobless claims under 300,000 indicate net payroll job growth. Over the past month, claims have averaged 253,500. It’s been nearly two years since claims hit the 300,000 mark.
Meanwhile, payroll job gains have averaged 176,000 a month over the past three months, easily enough to keep unemployment trending down.
The unemployment rate, at 4.9 percent in October, hasn’t budged much over the past year. But as the unemployment rate has declined to near the level that the Federal Reserve sees as healthy, the labor force has grown. Over the past year, the labor force has expanded by 2.6 million people, despite demographic changes, such as the retirement of the Baby Boomers, putting downward pressure on labor force participation.
