The number of applications for U.S. unemployment benefits unexpectedly fell last week, reaching a three-month low, indicating the labor market remains steady.
Initial jobless claims dropped by 1,000 to 253,000 in the week ended July 16, from an unrevised 254,000 in the prior period, a report from the Labor Department showed Thursday in Washington. The median forecast of 44 economists surveyed by Bloomberg called for 265,000. Continuing claims decreased.
Employers continue to retain staff amid improving U.S. growth and a shortage of skilled workers that they’re looking to hire. Sustained low levels of firings also signal a strong outlook for the job market that will help lift household spending, the biggest part of the economy.
“Demand for labor is high,” Jacob Oubina, senior U.S. economist at RBC Capital Markets LLC in New York, said before the report. “We’re not likely to see a material increase in the trend for layoffs.”
For 72 consecutive weeks, claims have been below the 300,000 level that economists say is typically consistent with an improving job market. That’s the longest stretch since 1973.
No states estimated jobless claims for the week, and there was nothing unusual in the figures, according to the Labor Department.
Economists’ estimates in the Bloomberg survey for weekly jobless claims ranged from 248,000 to 285,000.
Jobless claims data can be volatile in July as automakers begin the process of temporarily shutting down plants to retool them for the new model year. In Michigan last week, applications for jobless benefits decreased 9,600 on an unadjusted basis, while claims in Ohio fell 2,500.
Given the influence of such seasonal events, economists tend to focus on a rolling monthly average that smooths out the weekly fluctuations.
The four-week moving average decreased to 257,750 last week, from 259,000, the report showed.
The number of people continuing to receive jobless benefits fell by 25,000 to 2.13 million in the week ended July 9. The unemployment rate among people eligible for benefits dropped to 1.5 percent from 1.6 percent. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings, and a sustained low level of applications has typically coincided with faster job gains. Layoffs may also reflect company- or industry-specific causes, such as cost-cutting or business restructuring, rather than underlying labor market trends.