The number of Americans filing applications for unemployment benefits unexpectedly dropped last week, showing further healing in the labor market.
Jobless claims declined by 3,000 to 302,000 in the week ended July 12, a Labor Department report showed today in Washington. The median forecast of 51 economists surveyed by Bloomberg projected 310,000. The number of people continuing to receive jobless benefits fell to a seven-year low.
Waning dismissals are signaling the labor market is gaining additional momentum five years since the end of the last recession. A pickup in hiring and drop in unemployment are among reasons Federal Reserve officials are reducing monthly asset purchases and plan to bring an end to the stimulus program by the end of the year.
“The broad array of indicators on the labor market have been showing some improvement,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York, whose projection for 305,000 claims was among the closest in the Bloomberg survey. “Layoffs already are at a low level, so now it’s more a question of whether the hiring pace that we saw in the first half of the year can be sustained.”
Estimates in the Bloomberg survey of economists ranged from 300,000 to 325,000. The Labor Department revised the prior week’s reading to 305,000 from an initially reported 304,000.
Last week’s report covers the week of the government survey that will be used to calculate July payroll and unemployment data.
Another report today showed home construction unexpectedly declined in June to a nine-month low as a record drop in the South swamped gains in the rest of the nation. Builders began work on 893,000 homes at an annualized rate in June, down 9.3 percent from the prior month, according to Commerce Department figures.
Stock-index futures held earlier losses after the reports. The contract on the Standard & Poor’s 500 Index maturing in September declined 0.4 percent to 1,967.2 at 8:54 a.m. in New York as the Treasury Department and European Union imposed further sanctions on Russian business over Ukraine.
The four-week average of jobless claims, a less-volatile measure than the weekly figure, declined to 309,000, the lowest since June 2007, from 312,000 in the prior week.
There was nothing unusual in the data and no states were estimated, a spokesman said as the figures were released to the press.
The number of people continuing to receive jobless benefits dropped by 79,000 to 2.51 million in the week ended July 5, the fewest since June 2007. The unemployment rate among people eligible for benefits fell to 1.9 percent from 2 percent, today’s report showed.
More muted firings typically pave the way for acceleration in job growth. Employers added 288,000 jobs in June, lifting the average monthly advance so far in 2014 to almost 231,000. If that pace is sustained, job gains this year would be the best since 1999. The unemployment rate dropped last month to an almost six-year low of 6.1 percent.
Steady job gains might help keep companies such as Dearborn, Michigan-based Ford Motor Co. upbeat about growth prospects after a weaker first quarter.
“The labor market is achieving somewhat better footing” and “housing data in May were showing some signs of revival,” Ellen Hughes-Cromwick, Ford’s chief economist, said on a July 1 sales call. “We’ve seen very good improvements in manufacturing activity. Consumer sentiment has been in good stead and incomes are gaining ground.”
Gains in employment are keeping the Fed on track to end their monthly bond-buying program by year’s end. The policy-making Federal Open Market Committee in June trimmed its bond-buying by another $10 billion, to $35 billion per month.
At the same time, Fed Chair Janet Yellen told lawmakers earlier this week that further progress is needed before the central bank is ready to raise near-zero interest rates.
“While we’re making progress in the labor market, we haven’t achieved our goal,” Yellen said in Congressional testimony. Until the economy overcomes “substantial headwinds,” the Fed should pursue “an accommodative monetary policy,” she said.
Two-thirds of labor market indicators that Yellen has said she monitors to judge the health of the labor market haven’t yet returned to pre-recession strength. Still-elevated levels of underemployment and long-term unemployment, and a weaker rate of workers who are secure enough to quit their jobs, are among the gauges that remain weaker than 2004-07 averages.