Applications for U.S. unemployment benefits rose last week after reaching a four-decade low, consistent with a stronger labor market.
Jobless claims increased by 12,000 to 267,000 in the period ended July 25, from 255,000 the prior week that was the lowest since November 1973, a report from the Labor Department showed Thursday. The median forecast of 46 economists surveyed by Bloomberg called for 270,000. The four-week moving average, a less-volatile measure of job cuts, declined.
Dismissals holding below 300,000 and sustained hiring would help convince Federal Reserve policy makers that the economy can withstand an increase in the benchmark interest rate.
Claims “are at extremely low levels, which continues to emphasize that the labor market is improving,” Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said before the report. The improvement in the job market “is enough to keep the economy growing.”
Another report Thursday showed gross domestic product rose at a 2.3 percent annualized rate in the second quarter after a revised increase of 0.6 percent in the first three months of the year, according to the Commerce Department.
Economists’ estimates in the Bloomberg survey ranged from 250,000 to 285,000 claims.
There was nothing unusual in the report, a Labor Department spokesman said as the report was released to the press. Claims for Puerto Rico were estimated.
The four-week average, a less volatile measure than the weekly numbers, decreased to 274,750 last week from 278,500.
The number of people continuing to receive jobless benefits rose by 46,000 to 2.26 million in the week ended July 18. The unemployment rate among people eligible for benefits climbed to 1.7 percent from 1.6 percent. These data are reported with a one-week lag.
Claims have remained below 300,000, a level that economists say is typically consistent with an improving job market, for 21 straight weeks. That’s the longest such stretch since 2000.
Fed policy makers are monitoring measures of labor market slack as they move closer to raising interest rates for the first time since 2006. The Federal Open Market Committee on Wednesday held the fed funds target rate in its zero to 0.25 percent range, the board said in a statement following its two-day meeting.
“The labor market continued to improve, with solid job gains and declining unemployment,” the statement said. It said that “underutilization of labor resources has diminished,” dropping the modifier “somewhat” to describe the change.
Chair Janet Yellen has made it clear that she believes the central bank can raise rates in 2015 with gradual increases thereafter. The majority of economists surveyed by Bloomberg in July favored a September lift-off.
Employers added 223,000 jobs last month even as wages stagnated and the size of the labor force receded, according to Labor Department data. The jobless rate fell to 5.3 percent, the lowest level in seven years.
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