WASHINGTON -- Claims for jobless benefits unexpectedly dropped last week to the lowest level in almost six years, signaling the U.S. job market continues to mend.
The number of applications for unemployment insurance payments declined by 15,000 to 320,000 in the week ended Aug. 10, the fewest since October 2007, from a revised 335,000, a Labor Department report showed Thursday in Washington. The median forecast of 44 economists surveyed by Bloomberg called for 335,000. There was nothing unusual in the data and no states were estimated, a Labor Department spokesman said as the data was released to the press.
The slowdown in firings may be a precursor to a pickup in hiring, which would bolster household incomes and spending. Fewer dismissals are also helping boost consumer confidence as growth in the world’s largest economy shows signs of picking up in the second half of 2013.
“The labor market is improving,” said Brian Jones, a senior U.S. economist at Societe Generale in New York, who projected 322,000, the closest of all economists surveyed by Bloomberg. “We’ve got decent momentum on consumer spending” heading into the third quarter, he said.
Another Labor Department report Thursday showed the consumer- price index increased 0.2 percent in July after a 0.5 percent gain the prior month. The advance matched the median forecast of 82 economists surveyed by Bloomberg. The core measure, which excludes food and fuel, also climbed 0.2 percent from June.
Manufacturing in the New York region expanded in August for a third month, another report showed. The Federal Reserve Bank of New York’s general economic index fell to 8.2 from 9.5 last month. Readings greater than zero signal expansion in New York, northern New Jersey and southern Connecticut.
Stock-index futures dropped, adding to earlier losses, after the reports signaled an improving U.S. economy may prompt Federal Reserve policy makers to curtail monthly bond purchases. The contract on the Standard & Poor’s 500 Index maturing in September dropped 0.8 percent to 1,668.3 at 8:47 a.m. in New York.
Last week’s claims reading was lower than any economist in the Bloomberg survey projected. Estimates ranged from 322,000 to 347,000. The Labor Department revised the previous week’s figure from an initially reported 333,000.
The number of people continuing to receive jobless benefits dropped by 54,000 to 2.97 million in the week ended August 3. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments increased by about 36,700 to 1.55 million in the week ended July 27.
The unemployment rate among people eligible for benefits held at 2.3 percent in the week ended August 3, today’s report showed.
Thirty-five states and territories reported an increase in claims, while 18 reported a decrease. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and typically wane before job growth can accelerate. As an improving economy encourages companies to hold on to their employees, job candidates could benefit from a growing number of available positions.
“Layoffs are relatively low, it’s the lack of hiring that’s problematic,” Ryan Sweet, an economist at Moody’s Analytics in West Chester, Pa., said before the report.
Companies who did trim their workforce included Oshkosh Corp., which derives about half of its revenue from defense products and has felt government cuts to defense spending.
“Also during June and July, as previously announced, we reduced both our hourly and salaried workforces in the Defense segment,” chief executive officer Charles Szews said in an August 12 earnings call. “These reductions were necessary to align our staffing levels with lower expected production requirements.”
Others have added jobs, albeit at a slower pace. Payrolls expanded by 162,000 workers in July, compared to 188,000 the prior month. The jobless rate dropped to a more than four-year low of 7.4 percent in July from 7.6 percent in June.
Federal Reserve policy makers are watching the job market to determine when to begin scaling back the central bank’s $85 billion in monthly bond purchases. Officials have said they will continue the program until the labor market has improved “substantially.”
Central bankers will probably reduce their asset purchases in September, according to 65 percent of economists surveyed by Bloomberg this month.