WASHINGTON – Fewer Americans sought unemployment benefits last week, a sign that employers are hanging on to workers despite a sluggish economy.
THE NUMBERS: The Labor Department said Thursday that weekly applications for unemployment aid fell by 4,000 to a seasonally adjusted 264,000. The less volatile four-week average dropped by 7,500 to 269,500.
Weekly jobless claims have come in below the historically low level of 300,000 for 66 straight weeks, the longest such streak since 1973.
The total number of people collecting unemployment benefits slipped below 2.1 million last week to the lowest level since 2000; it’s down 7.5 per cent from a year ago.
THE TAKEAWAY: Applications for unemployment aid are a proxy for layoffs, so the jobless claims figures suggest employees are enjoying job security despite a recent slowdown in hiring.
KEY DRIVERS: Just because employers aren’t cutting jobs doesn’t mean they are hiring. U.S. employers added just 116,000 jobs a month from March to May, making it the weakest three months of hiring since mid-2012.
The Labor Department reported Wednesday that employers advertised the most job openings in nine months but were reluctant to fill them.
The hiring slowdown reflects a sluggish economy. U.S. growth came in at an annual rate of 1.4 per cent from October through December and 0.8 per cent from January through March. A strong dollar has hurt American exporters by making their products more expensive overseas. And low oil and natural gas prices have caused energy companies to slash investment.
“These data appear comforting in the light of the slowing in payrolls,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a research note. “But claims often are a not a reliable guide to employment in the early stage of a downturn, because the first thing firms do when demand falters is slow the pace of hiring, rather than start firing.”