The number of Americans filing new claims for unemployment benefits fell to the lowest level in nearly 8-1/2 years last week, suggesting the labor market recovery was gaining traction.
But other data on Thursday showed factory activity cooling this month and new homes sales tumbling in June. Given the volatility of new home sales data, last month’s sales plunge is unlikely to change the view of a housing market back on track.
Initial claims for state unemployment benefits declined 19,000 to a seasonally adjusted 284,000 for the week ended July 19, the lowest level since February 2006, the Labor Department said. Economists had expected claims to rise to 308,000.
The data provided further confirmation that the labor market is tightening. Employment has grown by more than 200,000 jobs in each of the last five months, a stretch not seen since the late 1990s.
“This is consistent with another payroll reading for July, but it will probably not be as strong as June,” said Sam Bullard, senior economist with Wells Fargo Securities in Charlotte, North Carolina.
In a separate report, financial data firm Markit said its preliminary U.S. Manufacturing Purchasing Managers Index slipped to 56.3 in July from 57.3 in June. A reading above 50 signals expansion in factory activity.