Fewer Americans than forecast applied for unemployment benefits last week, a sign the U.S. job market is making progress as the world’s largest economy grows.
Jobless claims fell by 14,000 to 298,000 in the week ended Aug. 16, a Labor Department report showed today in Washington. The median forecast of 46 economists surveyed by Bloomberg called for 303,000. Continuing claims fell to the lowest level in more than seven years.
Employers are holding the line on dismissals as second-half economic growth is projected to pick up, setting the stage for more hiring to meet demand. Waning claims also reinforce Federal Reserve policy makers’ view the labor market is strengthening, one reason they’re trimming monthly asset purchases.
“The job market is doing well right now, there’s no doubt about it,” said Guy Berger, an economist at RBS Securities Inc. in Stamford, Connecticut, who projected 295,000 claims. “There’s a good chance we’ll get another solid month of payrolls. Lower layoffs, together with faster hiring, mean better prospects for consumer spending.”
No states were estimated and there were no special factors, the Labor Department report showed.
Economists’ estimates in the Bloomberg survey ranged from claims of 285,000 to 315,000. The Labor Department revised the previous week’s figure to 312,000 from an initially reported 311,000.
Stock-index futures maintained gains after the figures, with the contract on the Standard & Poor’s 500 Index expiring in September rising 0.2% to 1,986.3 at 8:45 a.m. in New York.
The monthly average of claims, a less volatile measure than the weekly figures, rose to 300,750 last week from 296,000.
The number of people on jobless benefit rolls declined by 49,000 to 2.5 million in the week ended Aug. 9. It’s at the lowest level since June 2007, before the last recession began.
Last week included the 12th of the month, which coincides with the period the Labor Department uses in its survey of employers to calculate monthly payroll growth. The employment report for August will be released on Sept. 5.
Initial jobless claims reflect weekly firings and typically wane before job growth can accelerate. Payrolls grew by more than 200,000 in July for the sixth straight month, the first time since 1997, according to Labor Department data released earlier this month. The jobless rate climbed last month to 6.2% from an almost six-year low of 6.1% as more Americans entered the labor force to look for work.
Federal Reserve Bank of Kansas City President Esther George said she’s encouraged by broad-based employment gains that show the world’s largest economy is strong enough to withstand higher interest rates.
“We have seen significant progress in the labor market over the last three years, and particularly this year,” George said today in a Bloomberg Television interview in Jackson Hole, Wyoming. “As we look at the healing we’ve seen in the economy and that progress, we’re in a good place to begin talking about normalization.”
Fed officials raised the possibility they might begin removing aggressive stimulus sooner than anticipated, as they neared agreement on an exit strategy, according to minutes of their July meeting released yesterday.
Fed Chair Janet Yellen has highlighted uneven progress in the labor market in making the case for further accommodation. The minutes showed “many participants” still see “a larger gap between current labor market conditions and those consistent with their assessments of normal levels of labor utilization.”
At the same time, “many members” noted that the “characterization of labor market underutilization might have to change before long,” particularly if the job market makes faster-than-anticipated progress, the minutes also said.
Some companies are adjusting staff according to the outlook. Deere Co., the world’s largest agricultural-equipment maker, on Aug. 15 said it’ll indefinitely lay off more than 600 workers at some U.S. plants as it reduces output in the face of weaker demand. Affected factories include two in Illinois, one in Iowa and one in Kansas. Deere also implemented a seasonal shutdown affecting most of the workers at another Iowa plant.