Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Jobless Claims Drop to 8.5-Year Low

By Associated Press - Jul 24, 2014 at 9:57AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The recent drop-off in unemployment benefit applications points to a substantial number of jobs added in July, raising expectations for the monthly employment report to be released Aug. 1.

WASHINGTON (AP) -- The number of people seeking U.S. unemployment benefits fell last week to its lowest level in more than eight years.

Weekly applications for unemployment aid dropped 19,000 to a seasonally adjusted 284,000, the Labor Department said Thursday. That's the lowest reading since February 2006, nearly two years before the Great Recession began.

The four-week average, a less volatile measure, declined 7,250 to 302,000. Claims for jobless aid have been falling for the past three months. Recent reports have coincided with the temporary summer shutdowns of auto plants, yet the impact of those closures is addressed through seasonal adjustments.

Applications are a proxy for layoffs. When employers hold onto their workers, it's a sign of potential income gains, increased hiring and confidence that the economy will grow. The recent drop-off in unemployment benefit applications points to a substantial number of jobs added in July, raising expectations for the monthly employment report to be released Aug. 1.

"All in, it looks like we may be in for another solid payroll report," said Jennifer Lee, a senior economist at BMO Capital Markets.

The decline in people applying for benefits buttresses other reports that the economy is improving.

Employers added 288,000 jobs in June, the fifth straight month of job gains above 200,000. That's the first such stretch since 1999, during the height of the dot-com boom. The unemployment rate has fallen to 6.1%, the lowest since September 2008.

Total layoffs in May dropped below pre-recession levels, the government said in a separate report. Job openings are at their highest level in seven years, while more workers are quitting their jobs. Workers usually quit when they have an offer for a better position or confidence that they can find one.

Still, the job growth has done little to lift wages significantly. Wage growth has barely matched inflation during the economic recovery.

But more people with jobs increases the total number of paychecks, which could boost consumer spending and growth. After a sharp contraction in the economy in the first three months of the year, most economists expect growth to return in the April-June quarter and exceed 3% at an annual pace in the second half of 2014.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
656%
 
S&P 500 Returns
144%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/01/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.