WASHINGTON – The number of people seeking U.S. unemployment aid dropped sharply last week, the Labor Department said Wednesday, the latest sign that businesses are cutting few jobs.
THE NUMBERS: Weekly applications for jobless benefits dropped 12,000 last week to a seasonally adjusted 260,000. That is not far from the four-decade low of 255,000 reached in July. The four-week average, a less volatile measure, was unchanged at 271,000.
The number of people that are receiving benefits rose 34,000 to 2.2 million.
THE TAKEAWAY: Applications are a proxy for layoffs, so last week’s drop is a sign that companies are cutting few jobs.
KEY DRIVERS: Steady job gains over the past three years have put more Americans back to work and there are early signs that wages are rising. That is lifting consumer spending and boosting growth. The strong dollar and slower overseas growth have reduced corporate profits but so far there is no sign companies are responding by cutting workers.
BIG PICTURE: The low level of applications has coincided with solid hiring. Employers added 271,000 jobs in October, the largest monthly gain this year. The unemployment rate fell to 5 per cent from 5.1 per cent in the previous month. Employers have added an average of 206,000 jobs a month this year, enough to lower the unemployment rate over time.
There have also been signs that average pay is finally picking up after roughly six years of sluggish growth. Wages and salaries rose 0.6 per cent in October, the Commerce Department said Wednesday, the largest gain since May.
In the July-September quarter, wages and salaries grew at a 5.4 per cent annual rate from the previous quarter. That is better than the 5.1 per cent gain in 2014 and double the increase in 2013.
This story has been corrected to show that the 5.4 per cent gain is a quarterly increase, not annual.