Applications for unemployment benefits held steady at 254,000 in the first full week of July, the Department of Labor reported Thursday morning, the same extreme low reading as the week before.
Economists had expected a tick in jobless claims, which are seasonally adjusted, up to 265,000.
Instead, they remained at the lowest level since April.
After rising sharply in May, jobless claims are now hovering near 40-year lows, providing one of the strongest signals available that the jobs recovery is still intact and not in imminent danger of reversing.
Jobless claims are viewed as a proxy for layoffs, one that provides almost a real-time gauge of the health of the labor market because the numbers are released weekly. With few layoffs, not much job creation is needed to sustain health net job creation.
While job creation slowed throughout the spring and early summer and has fallen off the pace of recent years, the jobs report for June released Friday showed 287,000 new payroll jobs, more than enough to keep unemployment trending down over the long-term.
Economists calculate that jobless claims below the 300,000 mark translate to payroll job gains and falling unemployment. Claims haven’t hit that level in 71 weeks, the longest such streak since 1973.
The hot jobless claims numbers will give Federal Reserve policymakers one reason to favor tightening monetary policy in upcoming months, as it signals that the economy is growing and heading toward full capacity, rather than slipping toward recession and needing easier money.
“This is just what an economy at full employment looks like,” Bank of Tokyo-Mitsubishi UFJ economist Chris Rupkey wrote in reaction to Thursday’s numbers, suggesting that they could lead the Fed to consider raising interest rates as early as September.
