U.S. initial jobless claims drop sharply at end of 2016, low layoffs level to underpin household sentiment, spending

U.S. initial jobless claims dropped sharply during the end of 2016. For the week ending 31 December, the nation’s jobless claims fell to 235,000, much below the consensus expectations of 260,000. The four-week moving average dropped to 257,000. On the contrary, continuing claims for the week ending 24 December was up modestly, reaching 2112k from a downwardly revised 2096k.

Taking a look at the state-level detail, the fall in weekly claims was mainly due to California, with falls in Texas, New York and Georgia also contributing significantly.

“Taking the report in its entirety, the level of claims is consistent with ongoing improvement in US labor markets and the low level of layoffs will likely continue to support household confidence and spending”, said Barclays in a research report.

The fall to 235,000 in the last week of 2016 is possibly anomalous and there might be some rebound in initial claims in the data for next week, added Barclays.

At 06:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -129.38. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex