The number of Americans applying for their first week of unemployment compensation down again last week, the latest sign that a strengthening labor market is helping the economy rebound from a sluggish first half of the year.
Jobless claims dropped by 1,000 to 261,000 in the week ended Aug. 20, a report from the Labor Department showed on Thursday. According to the Bloomberg survey of economists, the median forecast was around 265,000.
The jobless claims have fallen for three consecutive weeks, and for much of the summer they have hovered near the lowest level in four decades. The figure has been below 300,000 for 77 consecutive weeks, the longest such stretch since 1970, when the U.S. population was far smaller. An economists’ rule of thumb is that any time claims are below 400,000, the labor market is growing steadily.
“The ongoing decline in initial and continuing claims indicates substantial underlying strength in labor markets,” Barclays analyst Rob Martin said in a note to clients. “Workers are not losing their jobs in large numbers, while … those workers who do get laid off are likely finding employment.”
Initial jobless claims reflect weekly firings, and a sustained low level of applications has typically coincided with faster job gains. Many layoffs may also reflect company- or industry-specific causes, such as cost-cutting or business restructuring, rather than underlying labor market trends.
Investors are looking to indications of the health of the world’s biggest economy for clues on the possible trajectory of interest rates. Some Fed officials indicated rates could rise as early as next month, and the odds of an increase in September have climbed to 28 percent from 10 percent a month ago, based on trading in federal funds futures.