The number of Americans who applied for unemployment benefits plunged last week, indicating that the labor market continues to strengthen. Jobless claims declined 14,000 to 298,000 in the week through Aug. 16, reported the Labor Department on Thursday.
Analysts surveyed by Bloomberg News had expected the number of jobless claims to total 303,000 last week. Existing claims touched the lowest level in over seven years.
“The job market is doing well right now, there’s no doubt about it,” Guy Berger, a Stamford, Connecticut-based economist at RBS Securities Inc, told Bloomberg News. “There’s a good chance we’ll get another solid month of payrolls. Lower layoffs, together with faster hiring, mean better prospects for consumer spending.”
The Labor Department also revised figures for the prior week from the previously reported 311,000 to 312,000. The monthly average of jobless claims, which is smoothed out for volatility than the weekly numbers, jumped to 300,750 last week, compared with 296,000 a week earlier.
The number of individuals still relying on jobless benefits fell 49,000 to 2.5 million in the week through Aug. 9, the lowest level since pre-recession in June 2007.
The improving labor market conditions indicate that U.S. economy is sufficiently strong to bear higher borrowing costs, Federal Reserve Bank of Kansas City President Esther George told Bloomberg Television in Jackson Hole, Wyoming.
Elsewhere, Euro-zone consumer sentiment continued declining due to geopolitical tensions in Eastern Europe that threaten to weigh on the region’s economic revival. A measure of euro-area household confidence fell to minus 10 from July’s reading of minus 8.4. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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