The number of Americans applying for unemployment benefits fell unexpectedly last week to the lowest level in more than eight years, the government said on Thursday.
Jobless claims fell by 19,000 to 284,000 in the week ended July 19, the fewest since February 2006, the Labor Department reported Thursday, with no special factors impacting the week’s claims. The four-week moving average, considered a more nuanced indicator, fell by 7,250 to 302,000, the lowest level for this average since May 2007.
Automakers in July typically cut production in some factories to prepare for newer models, but strong demand for new cars minimized these shutdowns this year.
"Claims are often volatile in the summer because of the timing of shutdowns at auto plants for retooling, but even so the downward trend in claims is evident and very positive for the labor market and the overall economy," said Stuart Hoffman, chief economist at PNC Financial Services Group.
The number of people continuing to receive jobless benefits declined by 8,000 to 2.5 million in the week ending July 12, the fewest since June 2007. Last month, the unemployment rate fell to an almost six-year low to 6.1 percent. July's employment should be strong again, Hoffman said. Paul Dales, U.S. economist for Capital Economics, forecasts job growth has accelerated enough to bring unemployment down to 6 percent this month.
"The one big missing piece in the labor market recovery is wage growth, which remains soft," Hoffman said. "But as the job market continues to tighten firms will need to raise wages to retain their current workers and hire new ones, and wage growth will accelerate through the rest of this year and into 2015."