WASHINGTON – Fewer Americans sought unemployment benefits last week, a sign that U.S. workers still have job security despite recent tremors in the global economy.
The Labor Department said Thursday that weekly applications fell 16,000 to a seasonally adjusted 254,000. The 4-week average, which is less volatile, dipped slightly to 264,750.
Unemployment claims are a proxy for layoffs. The 70-week streak of claims staying below 300,000 is the longest since 1973. It’s evidence that employers view their business prospects as being strong enough to keep workers on the job, even as Britain’s vote to depart the European Union has further compounded the volatility seen in the financial markets this year.
There were recent signs that employers were turning somewhat pessimistic about the pace of growth as monthly hiring slowed sharply in April and May. Employers added just 38,000 jobs in May, the fewest in more than five years.
But economists expect the government jobs report being released Friday will show a pick-up in June, with estimates that employers added 180,000 workers.
The modest level of unemployment benefits indicates that employers are looking past the sluggish 1.1 per cent annual U.S. economic growth recorded from January to March. The total number of people receiving benefits has dropped 7.8 per cent from a year ago to 2.12 million.
Many economists are forecasting growth in excess of 2 per cent for the second quarter ended in June.
Still, the Federal Reserve has held off on any changes to its short-term interest rates. The U.S. central bank that once hinted at the possibility of multiple hikes in its federal funds rate this year has yet to take action so far, citing uncertainty about the economy and global factors such as weaker growth abroad.