The number of Americans filing for unemployment benefits fell last week for the first time in a month, the latest indication of labor market strength that is sustaining economic growth.
Initial claims for state unemployment benefits dropped 3,000 to a seasonally adjusted 247,000 for the week ended July 8, the Labor Department said on Thursday. Data for the prior week was revised to show 2,000 more applications received than previously reported.
Claims have now been below 300,000, a threshold associated with a healthy labor market, for 123 straight weeks. That is the longest such stretch since 1970, when the labor market was smaller. The labor market is near full employment, with the jobless rate at 4.4 percent.
The drop in first-time applications for jobless benefits came on the heels of data last week showing the economy created 222,000 jobs last month, the second biggest payrolls increase this year.
Labor market buoyancy could persuade the Federal Reserve to increase interest rates for a third time this year by December, despite inflation continuing to stubbornly run below the U.S. central bank’s 2 percent target.
The Fed’s survey of the economy published on Wednesday showed “labor markets tightened further for both low and high-skilled positions, particularly in the construction and IT sectors.”
Economists expect the Fed will announce in September a plan to start reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 2,250 to 245,750 last week.
A Labor Department official said there were no special factors influencing the claims data and that no states had been estimated. Claims tend to be volatile around this time of the year when automakers normally shut assembly plants for annual retooling.
In recent years some automakers kept production lines running to meet strong demand. With auto sales declining and inventories rising, some companies like General Motors (GM.N) are extending their summer shutdowns.
Economists say this could throw off the model used by the government to strip out seasonal fluctuations from the data.
Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid decreased 20,000 to 1.95 million in the week ended July 1. The so-called continuing claims have now been below 2 million for 13 straight weeks, pointing to shrinking labor market slack.
The four-week moving average of continuing claims rose 2,250 to 1.95 million, remaining below the 2 million mark for 11 consecutive weeks.
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