Initial claims for state unemployment benefits declined 12,000 to a seasonally revised 232,000 for the week ended Aug. 12, the Labor Department reported on Thursday.
Last week, the amount of Americans that filed for unemployment benefits dropped to nearly 6 month lows, directing to a firming labor market that could support the Fed’s ability to put out a plan to start unloading its huge bond portfolio. Initial claims for state unemployment benefits declined 12,000 to a seasonally revised 232,000 for the week ended Aug. 12, the Labor Department reported on Thursday.
That was the lowest level since the week ended Feb. 25 when claims dropped to 227,000, which was the best reading since March 1973. Data for the prior week was unchanged. It was the 128th week that claims remained under 300,000, a threshold connected with a robust labor market. That is the longest stretch since 1970, when the labor market was smaller. The unemployment rate is 4.3 percent.
A poll from economists had predicted claims declining to 240,000 in the last week. A Labor Department official said there were no special factors influencing the claims data and that no states had been predicted. The four-week moving average of claims, seen as a better measure of labor market trends as it flatten out week-to-week volatility, dropped 500 to 240,500 last week.
Payrolls advanced by 209,000 jobs last month. The economy has added 1.29 million jobs this year and the unemployment rate has declined five-tenths of a percentage point. Labor market tightness has, however, failed to produce strong wage growth, adding to inflation consistently below the Fed’s 2 percent target.
Minutes of the U.S. central bank’s July 25-26 policy meeting displayed policymakers appeared cautious about feeble inflation, with some urging against another interest rate hike.
Though labor market strength is more than likely enough for the Fed to outline a proposal to start offloading its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities at its next policy meeting next month
Thursday’s claims report also reported the number of people still receiving benefits after an initial week of aid dropped by 3,000 to 1.95 million in the week ended Aug. 5. The so-called continuing claims have now been below the 2 million mark for 18 consecutive weeks, pointing to a constricting labor market slack.
The four-week moving average of continuing claims declined by 6,000 to 1.96 million for the week ended Aug. 5, remaining under the 2 million mark for the 16th straight week.