(Bloomberg) — Fewer Americans than forecast filed applications for unemployment benefits last week, further evidence of a healthy labor market.
Jobless claims rose by 2,000 to 263,000 in the week ended Aug. 27, a report from the Labor Department showed on Thursday. The median forecast in a Bloomberg survey called for 265,000. The four-week average dropped to a three-week low.
Hiring managers are hesitant to pare workforces as a tighter labor market puts a premium on skilled and experienced employees. With dismissals close to four-decade low, sustained and elevated levels of hiring would boost the chances that Federal Reserve policy makers will raise interest rates by the end of the year.
“The trend right now seems to be that firms are still clamoring for people, not looking to shed anybody,” says Jacob Oubina, senior U.S. economist at RBC Capital Markets LLC in New York. “The firing side of the equation remains extremely negligible."
A report tomorrow is projected to show payrolls increased by 180,000 in August following a 255,000 jump the previous month. The jobless rate is forecast to fall to 4.8% from 4.9%.
As companies continue to hire with the economy lagging behind, productivity has suffered. Another report from the Labor Department on Thursday showed output per hour of work declined 0.6% in the second quarter, a downward revision from the previously reported 0.5% decrease. Labor costs increased a revised 4.3%.
Estimates in the Bloomberg survey for jobless claims ranged from 255,000 to 287,000. No states or U.S. territories estimated the number of applications last week, and there was nothing unusual in the figures, according to the Labor Department.
Filings have been below 300,000 for 78 straight weeks, the longest stretch since 1970 and a level that is typically consistent with an improving job market.
The number of people continuing to receive jobless benefits rose by 14,000 to 2.16 million in the week ended Aug. 20. The unemployment rate among people eligible for benefits held at 1.6%. These data are reported with a one-week lag.
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.
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