The number of people seeking U.S. unemployment benefits fell to the lowest level since 1973 last week, evidence that businesses are confident enough in the economy to hold onto their workers.
THE NUMBERS: Weekly applications for jobless benefits fell 19,000 to a seasonally adjusted 235,000, the Labor Department said Thursday. The four-week average, a less volatile measure, dropped to 253,500.
The number of people receiving benefits fell 66,000 to 1.98 million, the fewest in more than 16 years.
THE TAKEAWAY: Applications are a proxy for layoffs, and have remained below 300,000 for 89 straight weeks. That’s the longest streak since 1970.
All those figures indicate that job cuts are very low. Businesses are hungry for workers and are reluctant to let go of any that they have. Hiring is typically healthy in such cases.
“Clearly the latest news sent an upbeat signal about the labor market,” Daniel Silver, an economist at JPMorgan, said.
Some of the drop may reflect last week’s Veterans’ Day holiday, Silver said. The government sometimes has difficulty seasonally adjusting for the holiday, Silver said, meaning that applications could bounce back up next week.
Companies have slowed their hiring from last year but are adding jobs quickly enough to lower the unemployment rate over time. The economy gained 161,000 jobs in October and the unemployment rate fell to 4.9%.
KEY DRIVERS: The economy is showing signs of acceleration after sluggish growth earlier this year. Growth was just 1.1% in the first half of 2016, but rose to a 2.9% pace in the July-September quarter.
Americans ramped up their shopping in the last two months, and a separate report Thursday showed that home construction soared in October.
Those trends should boost growth in the final three months of the year to roughly a 2.5% annual pace. Still, growth will likely come in below 2% for the full year.