WASHINGTON – The number of people seeking U.S. unemployment benefits basically held steady last week, as the job market continues to outpace broader economic growth.
The Labor Department said Thursday that weekly applications for unemployment aid rose slightly by 1,000 to a seasonally adjusted 291,000. Jobless claims have been subdued for the past two weeks after winter storms caused them to spike at the end of February due to closed schools and construction sites.
The four-week average, a less volatile measure, increased 2,250 to 304,750. That average has dropped 7.5 per cent over the past year.
Applications are a proxy for layoffs. When employers keep their workers, it is generally a sign that they expect continued economic growth and will likely increase hiring. Applications below 300,000 are typically consistent with healthy job gains.
The relatively modest number of applications contrast with the Federal Reserve’s view announced Wednesday that economic growth has lost some momentum since the start of 2015.
“These data appear to defy” the Fed’s statement, said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “So far, though, we see no sign of slower hiring either.”
The historically low level of benefit applications has been matched by a surge in hiring. Employers have added an average of 288,000 jobs a month since December, including a net new 295,000 jobs in February. The gains have cut the unemployment rate to 5.5 per cent from 6.7 per cent a year ago.
Despite the job growth, other parts of the economy have stumbled during February’s harsh snowstorms. Retail sales, housing starts and factory output each dropped last month, a sign of either a temporary setback due to unseasonably cold weather or evidence that the additional paychecks generated by the recent hiring has done little to improve consumer spending.
Average hourly wages have climbed just 2 per cent over the past 12 months, a sluggish pace that has left inflation-adjusted household incomes lower now than they were before the start of the Great Recession in late 2007.
The Atlanta branch of the Federal Reserve forecasts that the economy grew at an anemic annualized pace of just 0.3 per cent during the first three months of this year, a severe slowdown from 2.2 per cent in the fourth quarter of 2014 and growth averaging nearly 5 per cent in the middle of last year.