New claims for unemployment benefits dropped to 259,000 in the second full week of June, the Labor Department reported Thursday, down from 277,000 a week earlier and the lowest level since April.
Thursday’s report easily exceeded economists’ expectations for a drop in claims back down to 270,000, and provided evidence that the jobs recovery still has momentum.
Jobless claims, which are adjusted to smooth out seasonal variations and released weekly, are viewed as a high-frequency gauge of the health of the jobs market and the broader economy. Fewer claims suggest fewer layoffs and more jobs.
For most of 2015 and 2016, jobless claims have provided one of the most encouraging signs that the U.S. economic recovery still has momentum, even as other economic indicators, such as monthly payroll jobs, have faltered.
New claims have gone 68 straight weeks — the longest such streak since 1973 — below 300,000, the level at which economists think the unemployment rate would start rising. The monthly average for claims is still running near the depths hit during the tech bubble in 2000.
Those bright statistics will reassure investors and officials concerned by the recent slowdown in monthly job gains, which have averaged just 116,000 over the past three months after running above 200,000 last year.
“The message from claims continues to be that the April/May payrolls data greatly exaggerated the extent to which the trend in employment growth is weakening,” High Frequency Economics forecaster Jim O’Sullivan wrote in reaction to Thursday’s report.
Given that slowing job growth is one of the factors that has stayed the Federal Reserve from raising rates this spring and early summer, the continued low jobless claims will weigh in favor of the Fed raising its target in coming months.
