Jobless- aid claims sink to 41- year low

Pay, workforce’s size lag good times

WASHINGTON — The fewest Americans in four decades filed applications for unemployment benefits last week, continuing to unwind an early- July surge that was probably tied to midyear factory shutdowns and school vacations.

Weekly applications for unemployment benefits fell 26,000 to 255,000, the fewest since November 1973, the Labor Department said Thursday. If the data were adjusted for the growth of the U. S. population since then, last week’s figure would likely be an all- time low.

Applications for unemployment benefits are a proxy for layoffs, so the low level indicates that employers are keeping their workers and likely hiring at a steady pace.

The four- week average, a less volatile number, fell 4,000 to 278,500. The average has fluctuated around that figure since May.

That is a far cry from the depths of the 2008- 2009 recession, when more than 600,000 people were applying for unemployment aid

each week.

“Companies are holding on to employees because they’re needed not just to satisfy current demand but also for growth initiatives,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “It’s yet another sign we’re likely to see solid economic expansion in the second half.”

One reason for last week’s drop is that auto plants and other factories close briefly in July to prepare for next year’s models. That pushed up applications in the previous two weeks. Now that many factories have reopened, applications have fallen back.

“We should always take this summer period for claims with a grain of salt,” said Jennifer Lee, an economist at BMO Capital Markets. “From a long- term perspective, we’re still looking at claims bobbing around at the lowest level in ages.”

“Employers are holding tightly onto their staff,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “This is the flip side of the difficulty they report in finding qualified people.”

With layoffs down, employers also are hiring more to meet greater demand for their goods and services. The economy added 223,000 jobs in June, and the unemployment rate fell to a seven- year low of 5.3 percent.

In Arkansas, the unemployment rate in June was 5.7 percent.

The economy has gained nearly 3 million jobs in the past year. With that many more people earning paychecks, economists forecast that spending should pick up and help fuel growth for the rest of this year.

Even so, there are some signs of ongoing weakness in the job market.

The unemployment rate fell in June mostly because many of the unemployed stopped looking for work, rather than found jobs. The

proportion of Americans working or looking for work fell to a 38- year low.

And average hourly pay was unchanged last month from May. Pay has risen at roughly a 2 percent annual pace since the recession ended in 2009, below the 3.5 percent typical in a healthy

265,000 economy.

That sluggish wage growth is likely keeping spending from increasing as much as

255,000 the healthy job growth would

July 18 suggest. Sales at retailers and restaurants fell last month, the government said earlier this month.

Yet home sales have picked up, and Americans are buying more cars. Sales of previously owned homes jumped in June to an eight- year high.

Automakers, including General Motors Co. and Ford Motor Co., are benefiting from growing sales as Americans’ finances improve.

“We just wrapped up the U. S. auto industry’s best six months in a decade,” said Kurt McNeil, GM’s U. S. vice president of sales operations. “People feel good about their jobs and the direction the economy as a whole is taking, so the second half of the year should be strong, too.”

Analysts expect the economy will expand at a 2.5 percent annual rate in the second quarter, after contracting 0.2 percent in the first three months of the year.

The index of U. S. leading

economic indicators increased more than forecast in June as historically low borrowing costs and a rebound in housing propelled growth.

The Conference Board’s index, a measure of the outlook for the next three to six months, rose 0.6 percent after a 0.8 percent increase in May that was larger than previously estimated, the New Yorkbased group said Thursday.

An improving job market, still- low interest rates and easing access to credit are contributing to gains in housing that are helping the economy overcome weakness in business investment and manufacturing. A slump in stocks last month caused by concerns over slowing growth in China and Greece’s debt crisis prevented the index from rising even more.

The increase in June is “pointing to continued strength in the economic outlook for the remainder of the year,” Ataman Ozyildirim, an economist at the Conference Board, said in a statement.

The median forecast of 41 economists surveyed by Bloomberg called for a 0.3 percent advance. Estimates ranged from increases of 0.1 percent to 0.6 percent.