Drop in Jobless Claims in U.S. Point to Strength in Labor Market

The number of people in the U.S. filing for benefits from unemployment fell last week unexpectedly.

Initial claims for benefits of state unemployment dropped by 4,000 to just over 264,000  for the week that ended on June 4, said the Labor Department on Thursday.

Claims for the week before that were also revised to show that 1,000 more applications had been received than was reported previously.

Economists that were polled forecast that initial claims would increase to 270,000 over the most recent week. Claims remained below 300,000 for 66 consecutive weeks. That threshold is associated with a job market that is strong. The current streak off 66 weeks is the longest since 1973.

The four-week average for claims, which is considered to be a better measure for trends in the labor market since it eliminates the volatility week to week dropped by 7,500 to end the week at 269,500.

An analyst with the Labor Department said no factors were included to influence the claims data from last week. Only claims from the state of Maryland were given as an estimate.

The unemployment report was the most recent indication that the U.S. labor market continues to be strong even though only 38,000 new jobs were added during May, the smallest gain in jobs since September of 2010. A Wednesday report showed that job openings had hit a high of nine months during April and that layoffs had fallen to their lowest since September of 2014.

The labor market’s health will likely determine when the Federal Reserve will make its next increase in interest rates.

Janet Yellen the Chair of the Federal Reserve reiterated this week the desire of the central bank of the U.S. to increase rates, but did not give any hint as to when that could happen.

Before the dismal May jobs reports, Yellen signaled rates would increase during the coming months based upon economic data continuing to suggest growth was increasing during the second quarter.

The Fed lifted its overnight benchmark interest rates back in December for only the first time in close to a decade.

The claims report on Thursday showed that the number of people who were still receiving benefits following an initial weeks of benefits fell by 77,000 to just over 2.10 million for the week ending May 28, which is the lowest level in almost 16 years.

The insured rate of unemployment dropped one tenth of one percent to a new record low of just 1.5%.

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