- Stephen Stanley, chief economist at Pierpont Securities
The number of new applications for unemployment aid declined last week to the second lowest level this year, adding to signs of a strengthening labour market. Initial jobless claims dropped 14,000 to a seasonally adjusted 289,000, according to the Labor Department official data. Analysts, however, expected 300,000 new claims, while claims for the previous week were revised up to 303,000. The four-week moving average of claims, which smooths out weekly volatility, fell by 4,000 to 293,500, recording the best four weeks of unemployment benefits data since February 2006. Meanwhile, continuing jobless claims for the week ended July 26, dropped to 2.518 million, compared to a revised 2.542 million in the previous week and above estimates of 2.512 million. Hiring has also improved as companies become more confident about the economic recovery. July marked the first time since 1997 that employers have added 200,000 or more jobs for six consecutive months. The unemployment rate stood at 6.2% last month, compared to 7.3% a year earlier.
The Federal Reserve is vigilantly monitoring the labor market, as policymakers, who have recently revised their assessment of labor market conditions, but at the same time pointed out there still remains some slack there. Maximum employment and price stability are among the policymakers' main goals, on which the timing of an interest rate increase depends.
© Dukascopy Bank SA