Firings Still Subdued, Even as Jobless Claims Increase
The number of Americans filing for unemployment benefits last week remained historically low.
Jobless claims increased by 4,000 to 277,000 in the week ended Aug. 15, a Labor Department report showed Aug. 20 in Washington. The median forecast of 48 economists surveyed by Bloomberg News projected 271,000. Applications have been lower than 300,000, a level typically associated with an improving job market, since early March.
The subdued level of firings has been accompanied by falling unemployment and steady job gains, signs the labor market continues to heal in its seventh year of recovery. Bigger advances in wages will be needed in addition to the strengthened job security to help convince consumers to boost spending, which accounts for 70% of the economy.
Claims are “still close to their lowest level in several decades, and that’s a good sign,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York, whose forecast was among the closest in the Bloomberg survey. “It’s a stable, low level of claims.”
The report may help color economists’ forecasts for August job gains, as the data were collected during the same week that serves as the reference period for monthly employment report surveys.
The four-week average of claims, a less-volatile measure than the weekly figure, climbed to 271,500 from 266,000 the week before, the lowest in more than 40 years. Last week’s average was lower than the 278,500 for the July employment survey week.
There was nothing unusual in the data and no states were estimated last week, the Labor Department said.
Estimates from 48 economists in the Bloomberg survey ranged from 264,000 to 285,000. The prior week’s claims were revised to 273,000 from an initial reading of 274,000.
The 255,000 applications filed in the week ended July 18 were the fewest since 1973.
The number of people continuing to receive jobless benefits declined by 24,000 to 2.25 million in the week ended Aug 8.
Initial jobless claims reflect weekly firings and typically decrease before job growth can accelerate. Many layoffs now reflect company- or industry-specific causes, such as cost-cutting or business restructuring.
Kraft Heinz Co., the food company that counts Warren Buffett’s Berkshire Hathaway Inc. as its largest shareholder, said Aug. 12 that it would eliminate about 2,500 jobs in the United States and Canada under the new management. The cuts include about 700 employees in Northfield, Illinois, the longtime home of the Kraft operation.
Federal Reserve policymakers are watching measures of labor market health such as jobless claims as they try to time an increase in their benchmark interest rate for the first time since 2006. Minutes released Aug. 19 from their July meeting showed officials said that while conditions for raising interest rates were approaching, they saw more room for labor-market healing and need more confidence that inflation is moving toward their goal.
