Applications for unemployment benefits drop to 1973 levels
The number of applicatants seeking U.S. unemployment benefits have plummetted to the lowest levels since 1973.
WASHINGTON — The number of people seeking U.S. unemployment aid plunged last week to the lowest level in nearly 42 years, evidence that employers are holding onto their staffs and likely hiring at a steady pace. Yet the drop also reflects seasonal volatility in the data.
Weekly applications for unemployment benefits fell 26,000 to 255,000, the lowest level since November 1973, the Labor Department said Thursday. If the data were adjusted for the growth of the U.S. population since then, last week's figure would likely be an all-time low.
The four-week average, a less volatile number, fell 4,000 to 278,500.
One reason for the drop, however, is that auto plants and other factories close briefly in July to prepare for next year's models. That pushed up applications in the previous two weeks. Now that many factories have reopened, applications have fallen back.
"We should always take this summer period for claims with a grain of salt," said Jennifer Lee, an economist at BMO Capital Markets. "From a long-term perspective, we're still looking at claims bobbing around at the lowest level in ages."
Applications are a proxy for layoffs, so the drop means companies are cutting few jobs. Applications have been below 300,000, historically a very low level, since March.
"Employers are holding tightly onto their staff," said Ian Shepherdson, chief economist at Pantheon Macroeconomics. "This is the flipside of the difficulty they report in finding qualified people."
With layoffs down, employers are also hiring more to meet greater demand for their goods and services. The economy added 223,000 jobs in June, and the unemployment rate fell to a seven-year low of 5.3 percent.
