WASHINGTON – The number of Americans filing applications for unemployment benefits unexpectedly dropped last week to the lowest level in more than eight years.
Jobless claims fell by 19,000 to 284,000 in the week ended July 19, the fewest since February 2006 and lower than any economist surveyed by Bloomberg forecast, a Labor Department report showed Thursday in Washington. Applications can be volatile at this time of year because of auto plant shutdowns, even as state data showed nothing inconsistent with prior years, a Labor Department spokesman said as the data was released to the press.
Fewer claims signal employers are reluctant to let go of staff as the talent pool shrinks and sales improve. A tightening labor market could lift wages and spur consumer spending, which accounts for about 70 percent of the economy.
Companies have “been running with very tight labor force levels and now as demand starts to pick up, businesses are finding themselves in some cases very labor constrained,” Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “As we start to see the demand continue to improve, we will start to see wage gains percolate.”
Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in September climbed 0.2 percent to 1,984.2 8:34 a.m. in New York.
The median forecast of 50 economists surveyed by Bloomberg projected 307,000 claims would be filed last week. Estimates ranged from 295,000 to 320,000. The Labor Department revised the prior week’s reading to 303,000 from an initially reported 302,000.
While the Labor Department spokesman said there was nothing unusual in the figures and no states were estimated, the timing and extent of closings to re-tool auto factories for the new model year is typically difficult for the government to gauge, causing claims to gyrate at this time of year. It will probably take several weeks for the data to stabilize enough to signal whether firings are truly ebbing.