By Jeffry Bartash, MarketWatch
The numbers: The number of Americans applying for unemployment benefits plunged by 27,000 in early December to 206,000, erasing a surge around Thanksgiving that now appears to have been a temporary blip triggered by an earlier-than-usual holiday.
The decline in applications for benefits puts claims, a rough way to measure layoffs, back near a half-century low.
They had jumped around Thanksgiving to an eight-month high, adding to worries the economy might be slowing. It appears to be a false alarm, however.
What happened: New applications for unemployment benefits fell to a seasonally adjusted 206,000 from 233,000 in the seven days ended Dec. 8, marking the lowest level in two and a half months.
Economists polled by MarketWatch had forecast a 226,000 reading.
Just a few weeks earlier, new claims had climbed to an eight-month high of 235,000, raising questions about whether the labor market had cooled off. A weaker-than-expected employment report for November fed into those concerns.
Yet the latest drop in claims makes it pretty clear there’s been no increase in layoffs nationwide.
The government adjusts the claims figures each week to account for seasonal changes in an ever-shifting labor force, but an earlier Thanksgiving basically played havoc with the formula for making these adjustments.
Claims tend to be erratic from Thanksgiving until after the Martin Luther King Jr. holiday in late January.
The more stable monthly average of new claims, meanwhile, fell by 3,750 to 224,750.
The number of people already collecting unemployment benefits, known as continuing claims, rose by 25,000 to 1.66 million. But they remain near the lowest levels since 1972.
Big picture: The labor market is still going strong as the current expansion nears a decade in length. The U.S. has added an average of 206,000 jobs a month through the first 11 months of 2018 — the fastest pace in four years. And with job openings near a record high hiring is unlikely to slow dramatically.
All the new hiring and extremely low unemployment are bulwarks against recession, though that could change if the Federal Reserve raises interest rates too quickly.
Market reaction: The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.94% and S&P 500 /zigman2/quotes/210599714/realtime SPX -2.38% rose modestly in Thursday trades, a day after a big rally triggered by renewed hope that the U.S. and China can strike a trade deal.
The 10-year Treasury yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -0.36% rose slightly to 2.91%. Yields have tumbled from a seven-year high of almost 3.25% a month ago amid growing worries about whether the U.S. economy is bound to stumble.