US jobless claims at lowest in five years
Labour market still growing
THE NUMBER of Americans filing new claims for unemployment benefits fell unexpectedly last week, touching a five-and-a-half-year low, suggesting a steadily improving labour market.
Initial claims for state unemployment benefits fell by 19 000 to a seasonally adjusted 326 000, the lowest level since January 2008, the Labor Department said yesterday.
Economists had expected first-time applications to rise to 345 000 last week.
While claims are extremely volatile in July because of summer vehicle plant shutdowns, the general tone of the report remained consistent with a pick-up in job gains.
The four-week moving average for new claims, which irons out week-to-week volatility, fell by 4 500 to 341 250.
“This suggests the labour market is still expanding. There is no sign that it’s slowing. It might actually be picking up a bit,” David Sloan, the senior economist at 4Cast in New York, said.
Vehicle makers traditionally close assembly plants for retooling in July, but they have either shortened the shutdown period or completely forgone the closures, throwing off the model that the government uses to adjust the data for seasonal variations.
US treasury debt prices fell on the claims report, extending earlier losses. US stock index futures were little changed.
Last week’s claims data has no bearing on Friday’s employment report for July. The government’s closely monitored report is expected to show non- farm payrolls increased by 184 000 last month after rising by 195 000 in June, according to a survey of economists.
The jobless rate is seen ticking down a tenth of a percentage point to 7.5 percent. There is a risk payrolls could surprise on the upside after a report on Wednesday showed private employers maintained a higher pace of hiring in July.
During the second quarter an average of 196 300 jobs were added every month.
The labour market is being closely watched by the Federal Reserve, which offered no indication on Wednesday that it planned to reduce its monthly $85 billion (R837bn) in bond purchases at its next meeting in September.
While the pace of economic growth has been tepid, there has not been a pick-up in layoffs. A separate report from consultants Challenger, Gray & Christmas showed planned layoffs at US firms fell 4.2 percent in July. – Reuters