US jobless claims at eight-week low; housing starts fall
NEW YORK – The number of Americans filing new applications for unemployment benefits fell last week to the lowest level in eight weeks, suggesting the labor market continued to strengthen despite the recent tightening in financial market conditions.
While other data on Thursday showed housing starts fell for a second straight month in August, they remained above the one million-unit mark, which signals a housing market growing at a solid clip. In addition, building permits rose last month.
The signs of a firming economy are supportive of an interest rate hike by the Federal Reserve at a meeting that concludes on Thursday. But the case for higher borrowing costs has been undermined by global financial markets turmoil.
The decision whether to raise the Fed’s short-term interest rate from near zero is seen as a close call.
“If the Fed just focused on the current economic situation there would be no doubt that they would raise rates today,” said Harm Bandholz, chief U.S. economist at UniCredit Research in New York. “But we learned over the past decades that the Fed puts more emphasis on financial developments than any other central bank.”
Initial claims for state unemployment benefits dropped 11,000 to a seasonally adjusted 264,000 for the week ended Sept. 12, the Labor Department said on Thursday. That was the best reading since the week ended July 18, when claims hit their lowest level since 1973.
It marked the 28th straight week that claims remained below the 300,000 threshold, which is usually associated with a strengthening labor market. Economists had forecast claims holding at 275,000 last week.
U.S. financial markets are pricing a roughly 25 percent probability of a lift-off in the Fed’s benchmark overnight interest rate when the U.S. central bank announces its decision at 2 p.m.
Stocks in Wall Street were little changed as investors awaited the announcement, while prices for U.S. Treasury debt rose marginally. The dollar fell against a basket of currencies. –Reuters