New claims for unemployment fell unexpectedly to 253,000 in the second week of July, the Department of Labor reported Thursday, after scraping ultra-low levels the previous two weeks.
Economists had expected claims, seasonally adjusted, to inch up to around 265,000 after falling to some of the lowest levels in forty years earlier in the month.
Instead, they dropped again to the lowest level since April, bringing the monthly average for claims down to the second-lowest level since 1973.
Investors and policymakers, including at the Federal Reserve, pay close attention to the weekly jobless claims numbers because they provide a high-frequency signal about the health of the economy. Fewer claims for unemployment insurance benefits suggest fewer layoffs.
Last week, Goldman Sachs economists identified jobless claims as one of the best “leading indicators,” along with vehicle sales, manufacturing output, and consumer confidence numbers.
Taken with June’s relatively strong jobs report, which showed the economy adding 287,000 new jobs, the super-low jobless claims will likely reassure Federal Reserve policymakers that the U.S. economic recovery is not in danger of stalling, despite some other mixed data and the uncertainty injected into markets by the June vote in the United Kingdom to leave the European Union.
Fed officials will meet in Washington next week to set monetary policy. Although they are not expected to raise interest rates, the job market data could be enough for them to execute the two 0.25 percent interest rate increases Chairwoman Janet Yellen and other officials have suggested could be in store this year.
