Unemployment claims fall to 326,000, 5-year low

U.S. employers added 162,000 jobs in July, enough

U.S. employers added 162,000 jobs in July, enough to lower the unemployment rate to a 41/2 -year low of 7.4 percent. But economists warn many people are staying out on the sidelines. (Aug. 2) (Credit: Bloomberg)

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The number of Americans applying for unemployment benefits fell 19,000 last week to a seasonally adjusted 326,000, the fewest since January 2008. The decline shows the job market continues to strengthen.

The Labor Department said Thursday that the less volatile four-week average slid 4,500 to 345,750. The July figures are typically volatile as the government has a difficult time adjusting for seasonal layoffs in the auto industry.

Still, the trend in weekly unemployment claims has been positive and offered hope that a better job market could help lift a sluggish economy later this year.

Applications, which are a proxy for layoffs, have fallen more than 12 percent this year. That's coincided with average job gains of 202,000 a month since January, up from an average of 180,000 in the previous six months. "The labor market continues to improve moderately," Sal Guatieri, senior economist with BMO Capital Markets, wrote in a note to clients.

The total number of Americans receiving unemployment benefits fell below 4.7 million the week that ended July 13, down from nearly 6 million a year earlier.

Employers have hired an average of 4.36 million people a month through May this year, the government says. That's 18 percent below the 2006 average of 5.32 million hires a month.

The government reports Friday on July job growth and unemployment. Analysts forecast 183,000 jobs were added last month, and the unemployment rate fell to 7.5 percent from 7.6 percent in June.

A private survey released Wednesday showed surprising strength in the job market. The payroll company ADP said that companies created 200,000 jobs in July, the most for that survey since December. And it revised up its estimate of the number of jobs the private sector created in June to 198,000 from 188,000.

The ADP report is derived from payroll data and tracks private employment. It does not report government hiring.

Hiring has remained solid despite a weak economy. The Commerce Department reported Wednesday that the economy grew at a 1.7 percent annual rate from April through June. That's better than the revised 1.1 percent growth rate from January through March. But it's still too sluggish to rapidly lower unemployment.

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