US jobless claims lowest in more than eight years

Job seekers check out opportunities at a job fair on June 12, 2014 in Chicago, Illinois.

The number of unemployed workers applying for jobless benefits tumbled in the most recent weekly data to the lowest level in more than eight years, signaling that employers are letting go of very few workers.

Applicants for regular state unemployment-insurance benefits in the week that ended July 19 dropped by 19,000 to 284,000 — the lowest level since February 2006, the U.S. Labor Department reported Thursday. Economists surveyed by MarketWatch had expected initial claims of 310,000 in the most recent weekly data.

The yield on the 10-year Treasury (ICAPSD:10_YEAR)   edged higher, indicating traders growing slightly more confident in the economy.

When there are low levels of initial claims, that's a signal that employers aren't letting go of many workers. What's even better for the economy and the labor force as a whole is that employers appear to be ramping up hiring.

Economists did add a note of caution after the release of Thursday's data, saying that there may be seasonal adjustment problems related to temporary shutdowns in the auto industry and elsewhere.

“I highly doubt that we settle out at such a low level,” said Stephen Stanley, chief economist at Pierpont Securities. “The last time claims spent more than a week or two below 300K, in 2006, the unemployment rate was well below 5%.”

Next week the government will deliver its latest monthly snapshot of employment throughout the country, and economists polled by MarketWatch are looking for a pullback in monthly job growth, after a large jump up in June. Another month of healthy job gains is likely to add to evidence that the economy's weak performance in the first quarter was somewhat of a blip, and that there's reason to hope for ongoing growth.

A low number of layoffs and stronger job growth do more than just put more money in workers' pockets. These trends can also lead to greater confidence when it comes to workers' career prospects and their families' personal finances. Greater confidence can lead to more spending, creating a healthy economic cycle.

Data details in the claims report were also positive. The average of new claims over the past month declined by 7,250 to 302,000 — the lowest level since May 2007. The government also said that continuing claims in the week that ended July 12 dropped by 8,000 to a seasonally adjusted 2.5 million — the lowest level since June 2007. Continuing claims reflect the number of people already receiving benefits.

“The gradual improvement in continuing claims is particularly encouraging and is consistent with recent declines in the unemployment rate, suggesting that unemployed workers continue to find jobs,” said Gennadiy Goldberg, a U.S. strategist at TD Securities.

MarketWAtch