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The Labor Department released a report on Thursday showing an unexpected decrease in first-time claims for U.S. unemployment benefits in the week ended January 13th.
The report said initial jobless claims fell to 187,000, a decrease of 16,000 from the previous week's revised level of 203,000.
Economists had expected jobless claims to inch up to 207,000 from the 202,000 originally reported for the previous week.
With the unexpected decline, jobless claims dropped to their lowest level since hitting 182,000 in the week ended September 24, 2022.
The Labor Department said the less volatile four-week moving average also edged down to 203,250, a decrease of 4,750 from the previous week's revised average of 208,000.
Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also fell by 26,000 to 1.806 million in the week ended January 6th.
The four-week moving average of continuing claims also slid to 1,848,000, a decrease of 13,750 from the previous week's revised average of 1,861,750.
"Looking past the seasonal noise, the initial and continued claims data are consistent with a labor market that will need further loosening before the Fed considers rate cuts and bolsters our assumption that the March FOMC meeting will be too soon," said Matthew Martin, U.S. Economist at Oxford Economics.
He added, "However, we expect job growth to moderate further but remain positive in the months ahead, giving the Fed room to start cutting rates at its May meeting as long as inflation continues to decelerate."
