The number of Americans filing new claims for unemployment benefits unexpectedly dropped last week, reflecting continued strength in the labor market.
The Labor Department reported Thursday that initial claims for jobless benefits fell by 9,000 to a seasonally adjusted 228,000 for the week ending July 15.
Economists polled by Reuters had forecast 242,000 applications for the past week.
Although the labor market remains tight, last week’s decline was likely exaggerated by difficulties adjusting the data for seasonal patterns. According to Lou Crandall, chief economist at Wrightson ICAP, unadjusted claims typically rise during the second full week of July.
“However, the seasonal pattern is sensitive to exactly when the reporting week ends,” Crandall said. “This year’s seasonal factor falls right in the middle.”
Automakers also often shut down plants in July to retool for new models. But these temporary closures don’t always occur at the same time, which could undermine the model the government uses to remove seasonal fluctuations from the data.
Relative to the size of the labor market, applications are well below the 280,000 level that economists say would indicate a significant slowdown in job growth.
The labor market remains tight as companies hoard workers after struggling to find labor during the COVID-19 pandemic. The Federal Reserve has raised its official interest rate by 500 basis points since March 2022.
The subsidy claims data covered the week during which the government surveyed businesses for the nonfarm payrolls component of the July jobs report. Applications fell during the survey weeks of June and July. The economy added 209,000 jobs in June.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased by 33,000 to 1.754 million during the week ending July 8, according to the claims report.
At current levels, so-called continuing claims are low compared to historical standards, indicating that some laid-off workers are quickly finding new employment.
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