The Labor Department said Thursday that weekly applications
for unemployment benefits dropped 6,000 to a seasonally adjusted 275,000. The
four-week average, a less volatile measure, increased 500 to 275,750. Benefit
applications had risen 11,000 in the previous week to 281,000. But even that
temporary uptick left benefit claims, a proxy for layoffs, below the 300,000
mark. Applications have been below that level for the past six months, a
stretch last seen 42 years ago.
Ian Shepherdson, chief economist at Pantheon
Macroeconomics, said that the result was consistent with a healthy labor market
generating around 250,000 jobs per month. He cautioned, however, that it was
too early to gauge the impact of recent market turbulence on hiring decisions
in the coming months.
Last week, the government reported that the unemployment
rate dropped to a seven-year low of 5.1 percent in August. That puts it at a
level viewed by many economists as “full employment,” which is one of the
Federal Reserve’s major goals for managing the economy. The report showed that
the number of people receiving unemployment benefits stood at 2.26 million for
the week ending Aug. 29, up by 1,000 from the previous week.
The Fed is closely following all economic data in advance of
next week’s meeting when officials could decide to raise interest rates for the
first time in nine years. A key Fed rate has been at a record low near zero
since December 2008, when the central bank battled to pull the economy out of
the worst economic downturn since the 1930s. With unemployment down
significantly from the 10 percent peak it hit during the recession, many
analysts believe the Fed will see a need to start raising rates.
However, another Fed priority is keeping inflation rising at
an optimal rate of 2 percent a year — a goal that has not been met. Recent
developments including an economic slowdown in China, falling oil prices and a
stronger dollar will likely make the inflation target harder to meet, at least
in the short term.
In a separate report Thursday, the Labor Department said
that import prices fell 1.8 percent in August, reflecting falling energy
prices. For the past 12 months, import prices are down 11.4 percent, the
biggest 12-month decline since September 2009. Lower import prices put
additional downward pressure on overall inflation. At the moment, many
economists believe the chance for a Fed rate hike in September stands at about
50-50.
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