The number of Americans filing for unemployment benefits for the first time rose less than analysts had expected last week; the four-week moving average shows claims fell to a 44-year low. Analysts now say, then, this is quite indicative of a tightening labor market.
Indeed, initial claims for state unemployment increased by only about 1,000 to a seasonally adjusted 234,000 (for the week ending May 20), according to a statement from the US Department of Labor, on Thursday. While smaller than expected, though, the increase still comes after three steady weeks of declines.
It is also important to note that this continues the 116th straight week with claims below 300,000, which is considered the threshold for a healthy labor market. Furthermore, this is the longest such run since 1970, when the labor market was, of course, considerably smaller. As such, the US labor market is near full employment; we have a jobless rate of 4.4 percent (a ten-year low).
In addition, economists note that overall, the number of people receiving unemployment benefits fell to 1.8 million, which is notably lower than the 2 million from the same week last year. As a matter of fact, this metric has fallen 11 percent over the course of the past year.
At the end of the day, then, these impressively low numbers continue to show that companies are holding on to more workers as well as hiring at a sweet and steady rate. In addition, Americans are feeling free to spend a little more and that has cranked up factory output; also, home sales are strong.
The bigger unemployment picture, though, also takes into consideration the number of people who are still receiving benefits. After an initial week of aid increased by 24,000 to 1.92 million (the week ending May 13), continuing claims still remain below the 2 million threshold, where they have been for at last the past six weeks. More specifically, the four-week moving average for continuing unemployment claims fell by 16,000 to 1.93 million; this is its lowest level since January of 1974. Also, the four-week moving average for continuing claims fell 76,750 just between the survey weeks in April and May, which continues to suggest more improvement in the US unemployment rate.