For the first time in eight years, the number of people seeking U.S. unemployment benefits fell to an all-time low last week. Weekly applications for unemployment aid dropped 19,000 to a seasonally adjusted 284,000, according to the Department of Labor. The number marks the lowest reading since February 2006, nearly two years before the Great Recession began. For the past three months, claims for jobless aid have been decreasing. Recent reports have coincided with the temporary summer shutdowns of auto plants, yet the impact of those closures is addressed through seasonal adjustments.
Applications are a representation for layoffs. When employers hold onto their workers, it’s a sign of potential income gains, increased hiring and confidence that the economy will grow. The recent drop-off in unemployment benefit applications points to a substantial number of jobs added in July, raising expectations for the monthly employment report to be released in the beginning of August. The decline in people applying for benefits reinforces other reports that the economy is improving.
Employers added 288,000 jobs in June, the fifth straight month of job gains above 200,000. The continuous gains are make up the first such stretch since the height of the dot-com boom in 1999. The unemployment rate has fallen to 6.1%, the lowest since September 2008. In a separate report, the government stated that total layoffs in May dropped below pre-recession levels. Job openings are at their highest level in seven years, while more workers are quitting their jobs. Workers usually quit when they have an offer for a better position or confidence that they can find another one. Despite the positive news regarding jobless claims, added jobs and the unemployment rate, the job growth has done little to significantly lift wages. During the economic recovery, wage growth has barely matched inflation.