WASHINGTON (Reuters) - New U.S. applications for unemployment benefits last week held steady at levels consistent with a strengthening labor market and job openings rose in September, encouraging signs for the Federal Reserve as it contemplates raising interest rates next month.
Labor market resilience, despite faltering global growth, underscores the U.S. economy’s strong fundamentals.
“The jobs market continues to do well. We are very close to hitting full employment and that suggests the Fed has the green light to start raising rates,” said Ryan Sweet, a senior economist at Moody’s Analytics in Westchester, Pennsylvania.
Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 276,000 for the week ended Nov. 7, the Labor Department said on Thursday. Despite having risen above their average for October, claims are not too far from levels last seen in the early 1970s.
They have now held below the 300,000 threshold for 36 consecutive weeks, the longest stretch in years. Claims below this level are usually associated with a healthy jobs market.
The four-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, rose 5,000 to 267,750 last week, still close to a 42-year low.
Labor market strength, marked by a surge in job growth in October and a jobless rate that is now in a range many Fed officials see as consistent with full employment, has bolstered expectations of a liftoff in the U.S. central bank’s benchmark overnight interest rate at the Dec. 15-16 policy meeting.
The Fed has kept its short-term interest rate near zero since December 2008. Last month, nonfarm payrolls recorded their largest gain since December 2014 and the unemployment rate fell to a 7-1/2-year low of 5.0 percent.
Prices for U.S. Treasury debt were higher, while the dollar slipped against a basket of currencies. U.S. stocks fell.
LABOR MARKET TIGHTENING
In a second report, the Labor Department said job openings, a measure of labor demand, increased 149,000 to 5.53 million in September. That was the third highest reading since the series started and lifted the jobs openings rate to 3.7 percent from 3.6 percent in August.
Hiring, however, dipped to 5.05 million in September from 5.08 million the prior month. The hiring rate slipped to 3.5 percent from 3.6 percent in August.
The gap between job openings and hiring suggests employers are having trouble finding qualified workers.
“It is indicative of the skills mismatch that has basically been prevalent for the better part of last couple of years, and other metrics continue to indicate that as well,” said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York.
The monthly Job Openings and Labor Turnover Survey, or JOLTS, is one of the job market metrics on Fed Chair Janet Yellen’s so-called dashboard.
The report also showed continued tightening in the labor market, with a drop in the number of unemployed job seekers per open job to a low ratio of 1.4 in September. That was the lowest since 2007 and was down from 1.5 in August.
The JOLTS report also showed little change in layoffs and quits rates, which the Fed looks at as a measure of job market confidence.
“Declining labor market slack, steady worker confidence, and continued employment gains will likely bolster the Fed’s confidence in the economic outlook and ultimately lead to an initial rate hike at the December meeting,” said Jesse Hurwitz, an economist at Barclays in New York.
Job openings were concentrated in trade, transportation and utilities, as well as education and food services. There were also increases in professional and business services, and government.
(The story fixes spelling error in first paragraph)
Reporting by Lucia Mutikani; Editing by Andrea Ricci