Jobless claims fell sharply to 269,000 in the first week of February, the Department of Labor reported Thursday, down from from 285,000 the week before and at the lowest level since the week before Christmas.
Economists had expected a smaller drop in initial claims to 281,000, according to a poll of private-sector forecasters conducted by Bloomberg.
The four-week moving average of claims also fell, by 3,500 to 281,250.
The drop put a halt to a recent uptrend that some economists thought represented early signs of weakness.
While still low, jobless claims, which are released weekly and viewed as a leading indicator of economic health, appeared in recent weeks to signal that an inflection point in the jobs recovery took place over the winter.
Claims hit a low point in October, when the four-week moving averaged dipped below 260,000, the lowest since the early 1970s.
Since then, claims have bounced around but overall moved upward. The data released Thursday, however, will complicate the picture.
Other economic indicators have been clearly warning of higher risk of recession: Gross domestic product growth slowed in the fourth quarter, industrial production has slowed, and stocks have fallen nearly 10 percent since the start of the year, as measured by the Dow Jones Industrial Average.
Much of the economic weakness has been tied to slowing growth overseas, and the accompanying plunge in oil prices that has decimated U.S. energy producers.
Job creation has held up, however, averaging over 230,000 new payroll jobs a month for the past three months, reassuring officials at the Federal Reserve that the economic weakness is likely to be only temporary.
Rising claims, however, would be the first hint that job creation is going to slow.
In a note published Wednesday, Goldman Sachs economists Elad Pashtan and Zach Pandl wrote that the upward trend in claims over the past few months has been widespread, and not just limited to oil-producing states like Texas and North Dakota. They placed the line to watch at 300,000 to 315,000 initial claims: Jobless claims above that level would “imply payroll growth closer to a trend-like rate.” That would mean around 85,000 new jobs each month, rather than over 200,000.
Other analyses indicate that significantly higher claims impact job growth on a lag of six months to a year.
Initial claims, however, have not breached the 300,000 mark in nearly a year.
