WASHINGTON – A measure of Americans who applied for unemployment benefits over the past month has fallen to its lowest level in almost six years, signalling fewer layoffs.
The Labor Department said Thursday that the average number of people who applied for benefits over the past four weeks dropped 6,250 to 335,500. That’s the lowest level since November 2007, the month before the Great Recession began.
The four-week average smooths week to week fluctuations.
Weekly applications for unemployment aid increased by 5,000 last week to a seasonally adjusted 333,000. But that’s up only slightly from the previous week’s 5 1/2-year low.
The decrease in the four-week average points to a positive trend in recent months. Applications, which are a proxy for layoffs, have fallen more than 10 per cent since the start of the year. That’s helped drive net job gains this year, which are the number of people hired minus the number who lose or quit their jobs.
Employers added 162,000 jobs last month, the smallest monthly gain since March. And most of the job growth came in lower-paying industries or part-time work. Since January, the economy has added an average of 192,000 jobs a month. But the pace has slowed to 175,000 in the past three months.
When employers are cutting few workers, as they are now, it doesn’t take many hires to create a high net gain.
The job market is improving, largely because layoffs have fallen to prerecession levels. But while employers are no longer cutting jobs, many remain reluctant to hire in the face of tax increases, federal spending cuts and slower global growth.
Layoffs have averaged 1.5 million a month this year through June, even fewer than the 1.77 million averaged in the pre-recession year of 2006. So few people are losing their jobs that it’s easy to forget that the job market isn’t yet healthy.
The unemployment rate fell in July to 4 1/2-year low of 7.4 per cent in July, down from 7.6 per cent in June. But that is still well above the 5 per cent to 6 per cent associated with a normal economy.