Jobless claims point to a more stable labor market

By Greg Robb

The four-week moving average of claims, which smooths out volatility, fell to its lowest level in two years.

Initial jobless claims - layoffs - remained low in the most recent week, showing signs of more stability in the labor market.

Claims rose by 1,000 to 200,000 in the week ended Jan. 17, the Labor Department said Thursday.

Historically, any number around 200,000 is exceedingly low. On an unadjusted basis, claims are significantly lower than they were last year.

Economists polled by The Wall Street Journal had estimated new claims would rise to 208,000 from the initial estimate last week of 198,000.

The four-week moving average of initial claims fell to the lowest level in two years.

Details: The number of people already collecting unemployment benefits in the week of Jan. 10 fell by 26,000 to 1.85 million, the government said.

Continuing claims had risen over the summer, a sign that workers were finding it hard to get a new job after being laid off. But that upward trend has now flattened out.

Big picture: "Initial and continuing jobless claims re-affirm a low-hire/low-fire labor market and point to stabilization" following the shock to the economy from President Donald Trump's tariff policy, Michael Gapen, chief U.S. economist at Morgan Stanley, said in a note to clients.

Some economists said claims are low this year because fewer seasonal workers were hired over the holiday period. But other economists noted that non-seasonally adjusted claims are also lower.

The low level of layoffs will allow the Federal Reserve to hold interest rates steady at its meeting next week. The central bank cut rates by 75 basis points over its last three meetings of the year because of concern that the labor market was weakening.

Looking ahead: Economists at Citi think that claims will rise gently in the coming months.

Market reaction: Stocks SPX were set to open higher on Thursday. The yield on the 10-year Treasury note BX:TMUBMUSD10Y rose to 4.262%.

-Greg Robb

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