Good Sign for Labor Market as Jobless Claims Sink to 281,000
By: Jeffry Bartash
WASHINGTON (MarketWatch) — The number of people who applied for U.S. unemployment benefits fell sharply in the seven days ended July 11, erasing a spike in the prior week tied to retoolings at auto plants and other seasonal quirks typical in midsummer.
Initial jobless claims in the period running from July 5 to July 11 declined by 15,000 to a seasonally adjusted 281,000, the Labor Department said Thursday. New claims have been under the key 300,000 level since late February, the longest run in 15 years.
“The trend in claims continues to point to labor market improvement,” said economist Derek Lindsey of BNP Paribas.
Put another way, the labor market continues to heal. The U.S. economy is still adding a solid 200,000-plus jobs a month, job openings are at a record high and layoffs are extremely low.
Initial claims had surged in early July, but the increase mostly stemmed from temporary shutdowns at auto and textile plans to retool for the latest designs and fashions. For example, claims in Michigan, a big auto-producing state, jumped in the first week of July and then subsided in the following week.
In several other states, certain educational employees such as bus drivers and cafeteria workers can also file claims when they are temporarily laid off.
These summertime changes in employment make it hard for government economists to adjust the report for seasonally variations in July, one of the most volatile months for jobless claims. Companies don’t always shut down plants in the same week each year or lay off the same number of workers.
Yet despite the unusually low level of claims, the U.S. labor market still hasn’t fully recovered from the devastation caused by the Great Recession. As Federal Reserve Chairwoman Janet Yellen acknowledged on Wednesday, the nation’s official 5.3% unemployment overstates the health of the labor market.
Nearly 17 million Americans are still out of work or can only find a part-time job. The Fed has been keeping interest rates low to try to goose the economy and help those people find work.
The average of new claims over the past month, meanwhile, rose by 3,250 to 282,500, the government said. The four-week average smooths out sharp fluctuations in the more volatile weekly report and is seen as a more accurate predictor of labor-market trends.
Continuing jobless claims declined by 112,000 to 2.2 million in the week ended July 4. These claims reflect people already receiving unemployment checks.