Latest data from the U.S. Labor Department shows that the number of people making initial claims for unemployment benefits for the week ending 25 July increased by a small amount over the previous seven days.
The news release says that the advance figure for seasonally adjusted new claims of 267,000 shows an increase of 12,000 over the unrevised figure of the previous week. Economists polled by MarketWatch had expected the new claims figure to come in at 275,000.
The Labor Department says that were no special factors influencing this week’s numbers.
Although the number is higher than that of the previous week, which had been the lowest weekly new jobless claims recorded since 1973, the figure is still below the critical 300,000 number. New jobless claims have remained below 300,000 since May, which is the longest run in 15 years.
The more important statistic is the four week moving average which tends to smooth out the bumps which might affect an individual week. The 4-week moving average was 274,750; a decrease of 3,750 from the previous week's unrevised average of 278,500.
Meanwhile, the insured unemployment rate for the week ended 18 July was 1.7%, an increase of 0.1% over the previous week. The four week moving average was down by 750 to 2,255,250 million.
Jennifer Lee, a senior analyst at BMO Capital Markets in Toronto, told Bloomberg that, “[Claims] are at extremely low levels, which continues to emphasize that the labor market is improving.” This improvement is enough “to keep the economy growing.”
Another report released on Thursday revealed that the GDP rose at an annualized 2.3% in the second quarter, after a revision of the Q1 figure to 0.6%.
The latest numbers must be like music to the ears of the Federal Reserve. After the Fed’s two day policy meeting that ended on Wednesday it said in a statement, “The committee anticipates that it will be appropriate to raise the target range for the Federal funds rate when it has seen some further improvement in the labor market.” MarketWatch points out the significance change to the use of the word “some” to the improvement sought.
Meanwhile, Jim O’Sullivan, chief economist at High Frequency Economics, said, “that change suggests that officials only need to see a little more improvement”
He added to that saying, “Two more unemployment reports will be released by then: they could easily show ‘some’ further improvement.”
The Fed will want to be certain that the forthcoming employment reports prior to its September meeting do in fact indicate further improvement in the labor market and that no global risks flare up before it signals its intentions to move on rates, was the view expressed by Tom Porcelli, chief U.S. economist at RBC Capital Markets.