The number of Americans who filed for jobless claims plunged last week, indicating that the labor market continues to grow stronger. Fresh applications of state unemployment benefits declined 14,000 to 289,000 for the week through August 2, said the Labor Department on Thursday.
The number of jobless claims that were filed the previous week were revised to show an increase of 1,000 new applications. Economists in a Reuters survey had expected the claims to increase to 305,000 for the week through August 2.
The four-week moving average of jobless claims, widely viewed as a more accurate measure of labor market patterns since it smoothes out weekly volatility, plunged 4,000 to 293,500, matching a low last touched in February 2006.
“The underlying trend seems to be improvement in payrolls. The slower pace of claims would be consistent with that,” Stephen Stanley, a Stamford, Connecticut-based chief economist at Pierpont Securities, told Reuters.
The jobless claims have now reached a level where any room for more decline is limited as the job market normalizes. Hence, the pace of employment needs to accelerate for any significant job growth to occur.
The strengthening job market has fuelled speculation the Federal Reserve may increase interest rate soon. However, the Fed apparently isn’t in a hurry to do so as the number of disheartened job seekers, part-time employees and long-term unemployed remains large.
Thursday’s unemployment benefits report indicated those who are still under benefits fell 24,000 to 2.52 million in the week through July 26. The jobless rate for individuals who are still receiving the unemployment benefits stood at 1.9 percent for the fourth consecutive week. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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