- Shoji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities
The number of Americans applying for unemployment benefits unexpectedly declined last week, reinforcing the view the labour market continued to strengthen. Initial claims for state unemployment benefits decreased 7,000 to a seasonally adjusted 262,000 for the week ended Feb. 13, the lowest level since November, according to the Labor Department. The previous week's claims were unrevised. The four-week moving average of claims, which irons out week-to-week volatility, dropped by 8,000 to 273,250 last week. Claims have now been below the 300,000 threshold, which is associated with a healthy labour market, for 50 consecutive weeks - the longest stretch since the early 1970s. The gauge declined 12,000 between the January and February survey periods, suggesting a pick-up in job growth. At the same time, nonfarm payrolls rose by 151,000 in January.
The health of the jobs market could determine whether the Fed hikes rates this year. How quick these lifts will come, though, will depend on how fast inflation pressures are able to bounce back after being kept at bay by cheap oil and lower costs of imports. Bets for a March rate hike have largely been eliminated due to tightening financial market conditions and concerns about the domestic and global economies.
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