Jobless Claims Keep Hovering Near Four-Decade Lows
Initial jobless claims in the United States continued to hover around four-decade lows last week as the labor market strengthens toward full employment.
Applications submitted to state agencies for unemployment benefits decreased by 5,000 to 271,000 in the week ended Nov. 14 from 276,000 in the previous period, a Labor Department report showed Nov. 19. The number of claims dipped to 255,000 in mid-July, the fewest since the 1970s.
Steady demand has encouraged employers to hold the line on layoffs as a tighter labor market makes it difficult to attract skilled workers. Employment has shown enough signs of strength to allow Federal Reserve policymakers to consider raising rates for the first time in almost a decade.
“The trend in initial claims remains very encouraging,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, who accurately projected the decrease in claims. “The job market continues to motor toward full employment, and we should be there by this time next year.”
The median forecast in a Bloomberg News survey of 46 economists called for a decline to 270,000. Estimates ranged from 260,000 to 282,000. The prior week’s claims were unrevised.
Nothing unusal was in the data, and claims for Louisiana last week were estimated because the state was switching to a new system for handling applications.
The claims data cover the period that the Labor Department surveys businesses and households to calculate payrolls and the jobless rate for November.
The four-week average of claims, a less-volatile measure than the weekly figure, climbed to 270,750 from 267,750 the week before. That compares with an average of 263,250 during the comparable employment survey period for October.
The higher average during the survey period signals that “job growth is going to slow” in November, Sweet said. He said he doesn’t think October’s 271,000 gain in non-farm payrolls is sustainable. “We’re going to see job growth pull back toward trend, which is 200,000 to 225,000 and still very solid.”
The number of people continuing to receive jobless benefits fell by 2,000 to 2.18 million in the week ended Nov. 7.
In that same period, the unemployment rate among people eligible for benefits held at 1.6%, where it’s been since mid-September, the report showed.
As part of its dual mandate, the Fed is looking to see consistent improvement in the labor market before raising interest rates for the first time since 2006. Meeting minutes released Nov. 18 showed policymakers inserted language in their October statement to stress that a December increase “may well become appropriate.”
The minutes broke policymakers into three camps, with some saying economic conditions necessary for tightening policy “had already been met,” while “most participants” estimated that their criteria “could well be met” in December.
