The Bureau of Labor Statistics data shows that the number of new claims for unemployment benefits dropped to its lowest level since 1973 in the seven days ended 18 July.
New applications from jobless people declined by 26,000 to 255,000, during the period under review. The trend of new claims for unemployment benefits by jobless Americans remaining under 300,000 has now been maintained since the beginning of March, the longest stretch in fifteen years.
The seasonal factors that affect the July employment figures, with retooling layoffs in the auto industry a significant factor at this time of year, have left a number of analysts skeptical about what can be read into the latest jobless figures.
The uncertain views from analysts have been expressed despite a statement from the Department of Labor saying there were “no special factors” causing the jobless number to drop its lowest level in 43 years. CNBC reports that Wall Street experts dispute that view, with economists saying that multiple factors converged to produce the unexpected and unusually low numbers.
Peter Boockvar, chief market analyst at The Lindsey Group said in a note, “In July, auto companies typically shut down facilities as they do some maintenance, and seasonal adjustments usually take this into account.” The note continued, “But if there is any shift by the auto companies in what they do, it can mess around with the seasonals. Thus, I don't want to read too much into the data.”
The four week moving average, which smooths out spikes, providing a more balanced picture, fell by only 4,000 to 278,500 based on the recently announced data.
The economic news release from the Bureau of Labor Statistics on 21 July revealed that the median earnings for full- time workers were $801 per week for the second quarter of 2015 (not seasonally adjusted). This is an increase of 2.7% for the same period last year. The report from 17 July however points out that real average hourly earnings decreased by 0.4% in June. This figure implies that there is very little wage pressure on employees.
Meanwhile, Robert Brusca, chief economist at FAO Economics, cautioned that the data might not signal higher employment numbers, but rather that firms are letting fewer workers go.
A far more optimistic view was expressed by Jennifer Lee , economist at BMO Capital Markets, who commented, “auto plant shutdown or no auto plant shutdown, the U.S. labor market continues to improve.”
Federal Reserve officials who have been pushing for an interest rate hike will certainly use this data as further evidence that an increase is due with the September meeting of the FOMC the most likely time for action on that front.