WASHINGTON -- The number of people applying for U.S. unemployment benefits dropped by a sharp 36,000 last week to a seasonally adjusted 280,000, the Labor Department said Thursday.
The four-week average of applications, a less volatile measure, fell 4,750 to 299,500. The total number of people collecting benefits during the first week of September was 2.43 million, the fewest since May 2007.
Applications for unemployment benefits remain at pre-recession levels. The number of people seeking benefits has been trending downward for the past four months.
"The fact that we're falling below 300,000 -- that's a good sign," said Aneta Markowska, chief U.S. economist at Societe Generale in New York. "Companies are not laying off. A big chunk of the decline in continuing claims is basically people finding jobs."
Over the past year, the four-week average for applications has fallen 7.1 percent. In 2009, during the recession, they topped 650,000.
Applications are a proxy for layoffs. When fewer people seek benefits, it suggests that employers are keeping their workers, likely because they are more confident about customer demand and may be ready to hire.
The drop in the number of people applying for benefits has been coupled with steady job growth, despite a slowdown in hiring in August.
Employers added just 142,000 jobs last month, according to the Labor Department, down from 212,000 in July. That was after a six-month streak of monthly job gains in excess of 200,000. The unemployment rate fell to 6.1 percent from 6.2 percent, but only because some of those out of work gave up looking. The government doesn't count people as unemployed unless they are actively searching for a job.
Companies are retaining workers as stronger household and corporate demand fuels order growth. Fewer firings and more job gains represent a labor market that has "improved somewhat further," even as other indicators point to persistent slack, Federal Reserve policy makers said Wednesday.
The Fed maintained a commitment to keep interest rates near zero for a "considerable time" after asset purchases are completed, saying the economy is expanding at a moderate pace and inflation is below its goal.
"The labor market has yet to fully recover," Fed Chairman Janet Yellen said at a news conference after a meeting of the Federal Open Market Committee Wednesday in Washington. "There are still too many people who want jobs but can't find them."
The sharp drop in applications for unemployment benefits "should ease any fears that the weaker-than-expected payrolls data for August represented a change in the trend," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics.
Still, increased hiring has yet to lift most Americans' paychecks. Wage growth has barely outpaced inflation since the recession ended more than five years ago.
Information for this article was contributed by Josh Boak of The Associated Press and by Victoria Stilwell, Jeff Kearns, Chris Middleton and Steve Matthews of Bloomberg News.
Business on 09/19/2014