WASHINGTON – The number of people seeking U.S. unemployment benefits slipped below 300,000 last week, after having spiked above that level in the prior week for the first time in nearly three months.
Weekly applications fell 17,000 to a seasonally adjusted 297,000, the Labor Department said Thursday. The four-week average, a less volatile measure, rose 4,750 to 299,000.
Applications are a proxy for layoffs. As fewer people seek unemployment benefits, it suggests that employers are holding onto more workers and potentially looking to bolster their hiring.
Applications have been under 300,000 for 11 of the past 12 weeks, an unusually low level that suggests employers are anticipating stronger economic growth. The four week average for jobless claims has plummeted 9 per cent over the past 12 months.
Such sharp declines in applications are unlikely to continue, analysts said. But at sub-300,000 levels, they point to better job gains in the Labor Department’s employment report, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
“The trend probably has now flattened off, but at an extraordinarily low level, consistent with very strong payroll numbers,” Shepherdson said.
The decline in application for unemployment benefits has been matched by a surge in hiring.
Employers have added an average of 228,500 jobs a month this year, putting 2014 on pace to be strongest year for hiring since 1999. That’s up from an average of 194,000 last year. The unemployment rate has fallen to a six-year low of 5.8 per cent, down from 7.2 per cent just a year ago.
The November jobs report being released Friday is expected to show gains of 225,000 last month, according to the data firm FactSet.
The payroll processer ADP said Wednesday that private companies added 208,000 jobs in November.
Even with gains this year and five years removed from the end of the recession, nearly 9 million people are out of work. Before the recession began in 2007, there were 7.6 million unemployed Americans. Less than a quarter of the people counted as jobless by the Labor Department are collecting unemployment benefits.
The recent job gains have not lifted wages by much, stifling the potential for the economy to grow more quickly. Average hourly pay rose 3 cents in October to $24.57. That’s just 2 per cent above the average wage 12 months earlier and barely ahead of a 1.7 per cent inflation rate.