Jobless Claims in U.S. Unexpectedly Drop to Three-Month Lowby
Four-week average, continuing benefit recipients also decline
Economists expected a gain to 265,000 in week ended July 16
The number of applications for U.S. unemployment benefits unexpectedly fell last week, reaching a three-month low, indicating the labor market remains steady.
Initial jobless claims dropped by 1,000 to 253,000 in the week ended July 16, from an unrevised 254,000 in the prior period, a report from the Labor Department showed Thursday in Washington. The median forecast of 44 economists surveyed by Bloomberg called for 265,000. In April, applications were at a four-decade low of 248,000.
Employers continue to retain staff amid improvements in the U.S. outlook and a shortage of skilled workers that they’re looking to hire. Sustained low levels of firings also signal good prospects for the job market that will help lift household spending, the biggest part of the economy.
“The labor market is getting tight,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “Companies don’t want to let go of their workers. It sets up a better environment for wage gains.”
For 72 consecutive weeks, claims have been below the 300,000 level that economists say is typically consistent with an improving job market. That’s the longest stretch since 1973.
No states estimated jobless claims for the week, and there was nothing unusual in the figures, according to the Labor Department.
Economists’ estimates in the Bloomberg survey for weekly jobless claims ranged from 248,000 to 285,000.
Jobless claims data can be volatile in July as automakers begin the process of temporarily shutting down plants to retool them for the new model year. In Michigan last week, applications for jobless benefits decreased 9,600 on an unadjusted basis, while claims in Ohio fell 2,500.
Given the influence of such seasonal events, economists tend to focus on a rolling monthly average that smooths out the weekly fluctuations.
The four-week moving average decreased to 257,750 last week, from 259,000, the report showed.
The number of people continuing to receive jobless benefits fell by 25,000 to 2.13 million in the week ended July 9. The unemployment rate among people eligible for benefits dropped to 1.5 percent from 1.6 percent. These data are reported with a one-week lag.
The report represents claims from the survey week for nonfarm payrolls, and
will be closely watched for signals on job growth in July. Payrolls climbed
by 287,000 last month, after a revised 11,000 gain in May.
Initial jobless claims reflect weekly firings, and a sustained low level of applications has typically coincided with faster job gains. Layoffs may also reflect company- or industry-specific causes, such as cost-cutting or business restructuring, rather than underlying labor market trends.