Claims for US jobless benefits tick up, level still healthy

WASHINGTON – More Americans applied for unemployment benefits last week, but claims remained at a low level consistent with a healthy job market.

THE NUMBERS: The Labor Department said Thursday that 244,000 Americans applied for jobless aid last week, up by 6,000 from the previous week. The four-week average, a less volatile measure, fell by 4,000 to 241,000, lowest since July 1973.

Overall, 2.06 million people are collecting unemployment checks, down 7.7 per cent from a year ago.

THE TAKEAWAY: Unemployment claims are a proxy for layoffs. They have come in below 300,000 a week for 103 straight weeks, the longest such streak since 1970. The low levels of claims suggest that employers are confident enough in the economy to hang on to their workers and perhaps know it would be difficult to find replacements in a tight job market.

KEY DRIVERS: Employers added a healthy 227,000 jobs in January after averaging 187,000 a month last year. The unemployment rate is 4.8 per cent, which the Federal Reserve considers full employment.

“The pattern (in jobless claims) is consistent with the trend in employment growth remaining strong — more than strong enough to keep the unemployment rate trending down,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics, wrote in a research report.

Fed Chair Janet Yellen has said that the central bank is close to achieving its goals of maximum employment and modest 2 per cent inflation.

She noted in congressional testimony last week that at the December meeting Fed officials expected to raise rates three times this year. Many private economists believe the Fed won’t start raising rates until June, giving the Fed more time to assess the potential impact President Donald Trump’s stimulus program of tax cuts and infrastructure spending will have on the economy.