U.S. initial jobless claims fall unexpectedly, Fed likely to remain on sidelines in March

Initial jobless claims in the U.S. for the week ended 4 February dropped unexpectedly to 234,000 from 246,000 a week ago. Consensus expectations were for the claims to come in at 249,000. The initial jobless claims are just 1k above the recovery-low set last November, which was a 43-year low at the time, noted Barclays in a research report.

The four-week moving average dropped to 244,000. The U.S. Department of Labor stated that no states were estimated and no special factors were reported in the data. Continuing claims for the week ended 28 January was up 15,000 to 2.078 million from a revised 2.063 million one week earlier. The insured jobless rate remained stable at 1.5 percent for the twelfth straight week.

The rebound in initial claims data shows the widespread improvement in labor market conditions in recent months, including the increase in participation, job flows from unemployment to employment, NFIB hiring intentions and NFIB hard-to-fill positions, among other factors, stated Barclays. The decline in initial claims and trends in the four-week moving average show that the labor market conditions continue to rebound and might keep the U.S. Fed on its tightening path.

However, some of the recent rebound has come from NFIB survey data that indicate intent and confidence as opposed to action.

“Softness in wage growth and the rise in the unemployment rate likely mean the Fed will remain on the sidelines in March as it awaits further information about the course of fiscal policy”, added Barclays.

At 5:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 40.5737. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex