(Bloomberg) – Fewer Americans than forecast filed applications for unemployment benefits last week, indicating the U.S. job market remains healthy.
Jobless claims fell by 4,000 to 262,000 in the week ended Aug. 13, the fewest in a month, a Labor Department report showed Thursday in Washington. The median forecast of 42 economists surveyed by Bloomberg called for 265,000.
Low firings combined with continued healthy hiring will help spur wage increases and boost the outlook for consumer spending, the biggest part of the economy, amid weak investment by companies. Businesses are holding on to existing employees to meet demand, while some are also facing a shortage of skilled workers.
“Claims continue to outperform,” said Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado, who projected a decline. “Employers are reluctant to lay people off. It’s consistent with firmer household spending.”
The figure has been below the 300,000 level for 76 consecutive weeks, the longest stretch since 1970. That is typically consistent with an improving job market.
The number of people continuing to receive jobless benefits rose by 15,000 to 2.175 million in the week ended Aug. 6, the highest level since April though still historically low. The unemployment rate among people eligible for benefits was 1.6% for a fourth straight week. These data are reported with a one-week lag.
There was nothing unusual in the overall figures, and one state, Vermont, had estimated jobless claims, according to the Labor Department.
Economists’ estimates in the Bloomberg survey for weekly jobless claims ranged from 260,000 to 275,000. The previous week’s figure was unrevised at 266,000.
The four-week moving average increased to 265,250 last week, from 262,750.
Economists will be monitoring the report closely as last week included the 12th of the month, which coincides with the period the Labor Department surveys employers to calculate monthly payroll data. The latest average compares with 257,500 in the similar period in July.
Initial jobless claims reflect weekly firings, and a sustained low level of applications has typically coincided with faster job gains. Layoffs may also reflect company- or industry-specific causes, such as cost-cutting or business restructuring, rather than underlying labor-market trends.
Minutes of the Federal Reserve’s July meeting, released Wednesday, showed that despite a strong rebound in job creation in June, officials were split on whether a broader slowdown in payroll gains this year meant the labor market was nearing full employment, or whether it was indicative of a weakening economy.
Investors see about a 50-50 chance that the central bank will raise interest rates by the end of the year, based on pricing in federal funds futures.
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