Fewer Americans filed applications for unemployment insurance benefits over the past month than at any time in more than eight years, the Labor Department said Thursday, a signal to economists that employers are hanging on to workers as demand improves.
The four-week average of joblessness claims, considered a less volatile measure than the weekly figure, dropped to 297,250, the lowest since April 2006, from 300,750 the previous week. Claims in the period ended Saturday climbed to 302,000, in line with the median forecast of economists surveyed by Bloomberg, from a revised 279,000 the previous week that was the lowest since 2000.
While auto plant shutdowns during this time of year make it more difficult for the government to adjust the data for seasonal variations, the declining trend points to a job market that is heating up. A tightening labor market could lift wages and spur consumer spending, which accounts for about 70 percent of the economy.
"Employment growth remains healthy," said David Sloan, a senior economist at 4Cast Inc. in New York and among the closest forecasters in the Bloomberg survey. The reading is "consistent with a strong labor market."
Another report Thursday showed consumer confidence retreated last week to an almost two-month low as perceptions about personal finances eased. The Bloomberg Consumer Comfort Index fell to 36.3 in the period ended July 27, the lowest since June 8, from 37.6 the week before. A gauge of households' financial well-being dropped by the most since mid-May after reaching an 11-week high.
The median forecast of 49 economists surveyed by Bloomberg projected unemployment claims would increase to 300,000. Estimates ranged from 280,000 to 320,000. The Labor Department revised the previous week's reading from an initially reported 284,000.
A Labor Department spokesman said no states were estimated and there was nothing unusual in the data. Nonetheless, the timing and extent of closings to retool auto factories for the new model year is typically difficult for the government to gauge, causing claims to gyrate at this time of year. It may take some time for the data to stabilize enough to determine how much firings have actually ebbed, economists said.
"It's going to be a couple of weeks before we get a clean reading," Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pa., said before the report. "The last couple of weeks' data has just been too good to be true."
Federal Reserve officials Wednesday continued to pare monthly asset purchases as the job market strengthens and the threat of disinflation diminishes. Nonetheless, policymakers said the labor market still has plenty of room for improvement, even after a drop in unemployment.
"A range of labor-market indicators suggests that there remains significant underutilization of labor resources," the Federal Open Market Committee said in a statement. Fed Chairman Janet Yellen also told lawmakers this month that while her view of the economy has turned "more positive," she's concerned about signs of job-market "slack" such as low participation in the labor force and sluggish wage growth.
Information for this article was contributed by Chris Middleton of Bloomberg News.
Business on 08/01/2014
Print Headline: Jobless claims at lowest in 8 years