Jobless Claims Fall to Lowest Level in Four Decades
The fewest Americans in four decades filed applications for unemployment benefits last week, continuing to unwind an early July surge that probably was tied to midyear factory shutdowns and school vacations.
Jobless claims plunged by 26,000 to 255,000 in the week ended July 18, the fewest since November 1973, a report from the Labor Department showed July 23.
The median forecast of 47 economists surveyed by Bloomberg News called for 278,000. Volatility is typical for this time of year as auto plants retool for the new model year and school staff varies with summer holidays, a department spokesman said as the data was released to the press.
Claims continue to hover near historically low levels as employers are retaining workers to cater to a pickup in demand after a slump in early 2015. Combined with steady hiring across states, the improvement will help sustain household spending, the biggest part of the economy.
“Claims will remain low for the foreseeable future,” Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, North Carolina, said before the report. “Businesses are having a tough time finding the workers they need. They expect sales to grow.”
Claims were estimated for Puerto Rico last week, the Labor Department spokesman also said.
Economists’ estimates in the Bloomberg survey ranged from 260,000 to 300,000 claims. The previous week’s figure was unrevised at 281,000.
The four-week moving average, a less volatile measure than the weekly numbers, decreased to 278,500 last week, from 282,500.
Since early March, claims have been below the 300,000 level that economists say is typically consistent with an improving job market.
Auto plants typically close around this time of the year as they retool operations for new models. The timing often differs from one year to the next, making it difficult for the Labor Department to adjust the claims figures for these seasonal swings.
Automakers, including General Motors Co. and Ford Motor Co., are benefiting from growing sales as Americans’ finances improve.
“We just wrapped up the U.S. auto industry’s best six months in a decade,” said Kurt McNeil, GM’s U.S. vice president of sales operations. “People feel good about their jobs and the direction the economy as a whole is taking, so the second half of the year should be strong, too.”
Federal Reserve policymakers, considering raising interest rates later this year for the first time since 2006, have noted the labor market is making strides while noting some slack remains.
Hiring has been strong, Labor Department figures showed July 2. Payrolls increased by 223,000 in June after a 254,000 gain the prior month. The U.S. jobless rate fell to a seven-year low of 5.3%, while wages stagnated and the size of the labor force receded.
Initial jobless claims reflect weekly firings, and a sustained low level of applications typically has coincided with faster job gains. In an environment of accelerating employment growth, many weekly layoffs also may reflect company- or industry-specific causes, such as cost cutting or business restructuring, rather than underlying labor-market trends.
Qualcomm Inc., seeking to appease investors after posting its worst sales decline since 2009, said July 22 that it plans to shake up its board and cut its workforce by 15% as competition stiffens in the smartphone-chip market.
