Jobless claims drop to lowest since 2006

Fewer Americans filed applications for unemployment insurance benefits over the past month than at any time in more than eight years, signaling employers are hanging on to workers as demand improves.

The four-week average of jobless claims, considered a less volatile measure than the weekly figure, dropped to 297,250, the lowest since April 2006, from 300,750 the prior week. Claims in the period ended July 26 climbed to 302,000, in line with the median forecast of economists surveyed by Bloomberg, from a revised 279,000 the prior week that was the lowest since 2000.

While auto plant shutdowns during this time of year make it more difficult for the government to adjust the data for seasonal variations, the declining trend points to a job market that is heating up. A tightening labor market could lift wages and spur consumer spending, which accounts for about 70 percent of the economy.

“Layoffs are low, and business confidence has held up very well over the last couple of months given all of the geopolitical tensions,” Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania, said before the report. “Claims are consistent with an acceleration in GDP growth in the third quarter.”

The median forecast of 49 economists surveyed by Bloomberg projected claims would increase to 300,000. Estimates ranged from 280,000 to 320,000. The Labor Department revised the prior week’s reading from an initially reported 284,000.

This story was originally published July 31, 2014 at 7:41 AM with the headline "Jobless claims drop to lowest since 2006."