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WASHINGTON (MarketWatch) — The number of people who applied for U.S. unemployment benefits slid to the lowest level since 1973 in the seven days ended July 18, another sign of strong labor-market conditions.
New applications for U.S. unemployment benefits declined by 26,000 to 255,000 in the seven days ended July 18. New claims have been under key 300,000 since late February, the longest run in 15 years.
While economists are likely to be skeptical of this week’s drop, which put claims at the lowest level since November 1973, the data should provide ammunition for those Federal Reserve officials who have been pushing for higher interest rates.
The consensus had been for a small increase in jobless claims. But retoolings at auto plants and other seasonal quirks typical in midsummer make it hard for government economists to adjust the report for seasonally variations. July is 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.
“We will pay little attention to any surprises,” said Lou Crandall, chief economist at Wrightson ICAP, in a note to clients prior to the release of the data.
Fed officials will meet next week to chart monetary policy for the next six weeks. Economists don’t think the U.S. central bank will decide to raise rates next week, but many will be looking for a signal from the Fed that it is preparing for a rate hike in September.
In this week’s data, the average of new claims over the past month edged down by 4,000 to a seasonally adjusted 282,500.
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 9,000 to 2.2 million in the week ended July 11. These claims reflect people already receiving unemployment checks.
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