U.S. Jobless Claims Remain Low, Labor Market Tightens

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According to information released by the U.S. Department of Labor on October 2, 2014, claims for unemployment benefits at the end of September fell, continuing a trend that indicated an improving labor market and a low rate of layoffs. The final week of September saw 287,000 people apply for new unemployment benefits, meaning that the initial-jobless-claims rate had stayed below 300,000 for five weeks out of seven. The improvement in jobless claims beat the expectations of some economists, as Reuters had expected the number to hit 297,000.

Parsing jobless-claim information can be difficult, as claims vary naturally from week to week, but economists agree that in general lower levels of jobless claims indicate low numbers of layoffs. Publicly announced layoffs in September dovetailed with that assessment, as fewer layoffs were announced during that time than in any month for 14 years.

The number of new jobless claims is approaching levels not seen in nearly 35 years, and analysts think it’s unlikely to drop much further. Claim levels have shown a downward trend since 2012, dropping from close to 400,000 at the beginning of that year to the current levels. Continued claims are dropping as well. Forty-five thousand workers have ended their claims, leaving 2.39 million on the jobless rolls after adjusting for seasonality, the lowest number since June 2006, well before the onset of the recent recession.

Analysts have suggested that the low levels of jobless claims are indicative of slack in the labor market decreasing. The slowdown in new claims may also show that employers have faith in the economy, electing to hold on to workers and planning for growth rather than preparing for tight times. Other data has shown hiring by small businesses increasing, though manufacturing in August showed a decline in orders despite overall growth, mostly due to reduced demand in the tricky industry of aircraft component manufacturing.

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