The number of jobless Americans who applied for unemployment benefits plunged last week, as the U.S. labor market continues to strengthen.
Unemployment claims plunged 26,000 to 319,000 during the week ending May 3, down from 345,000 in the previous week, reported the Labor Department on Thursday. This overshot economists’ forecast of a decline to 325,000 in a Bloomberg survey.
Though fewer dismissals are laying the path for increase in wages and employment, most companies are still keenly monitoring consumer spending patterns, which contribute to 70 percent of the US economy, to pick up before they can embark on a hiring spree.
“Claims are drifting lower on a longer-trend basis,” Jacob Oubina, a New York-based senior U.S. economist at RBC Capital Markets LLC told Bloomberg. “I think hiring will creep slightly higher.”
The 4-week moving average of jobless claims, which adjusts the data for volatility, rose to 324,750 up from 320,250 the previous week. The number of individuals who are still collecting unemployment benefits declined 76,000 to 2.69 million for the week ended April 26.
The report also indicated that the unemployment rate among persons who are entitled to benefits tumbled to 2 percent as of April 26, down from 2.1 percent a week earlier.
Companies absorbed 288,000 new workers in April, the most since January 2012, reported the Labour Department last week. Nonetheless, the labor participation rate, which measures the proportion of working- age individuals with a job, or those actively looking for work, plunged to 62.8 percent, the weakest in 36 years (since March 1978).
The data on unemployment claims fluctuated since early April due to spring recess and Easter holidays. However, the Labor Department told the press that most of the swings are now certainly over.