Applications for unemployment aid plummet to 42-year low

The number of unemployment benefits claims are at 255,000 for the week ending July 18.

That is a far cry from the depths of the 2008-2009 Great Recession, when more than 600,000 people were applying for jobless aid each week. However, the Labor Department reportedly said the summer months can show strong volatility, as school staffing changes as the academic year approaches and auto plants rework their operations to prepare for new models. Now that many factories have reopened, applications have fallen back. “This is the flipside of the difficulty they report in finding qualified people”.

The sturdy jobs picture together with a strengthening housing market brings the Federal Reserve a step closer to raising interest rates this year.

Even so, the claims data supported the fall in the overall unemployment rate last month to 5.3 per cent, the lowest level since April 2008. According to recent reports, Americans who filled out new applications for unemployment fell to a low that has not been seen in 41 1/2 years.

Earlier this month, the Labor Department released a separate report showing that non-farm payroll employment increased by 223,000 jobs in June, modestly below the addition of 230,000 jobs anticipated by economists.

Technology shares on Wall Street rebounded from the prior sessions’ losses, while the rest of the market was little changed after weak earnings from Caterpillar, the world’s largest construction and mining equipment maker, and diversified technology firm 3M.

The unemployment rate fell in June mostly because numerous unemployed stopped looking for work, rather than found jobs.

That sluggish wage growth is likely keeping spending from increasing as much as the healthy job growth would suggest.

In a separate report, the Conference Board said its Leading Economic Index rose 0.6 percent last month after advancing 0.8 percent in May. Sales of existing homes jumped in June to an eight-year high.