Applications for unemployment benefits climbed last week to a level that’s consistent with progress in the U.S. labor market.
Jobless claims rose by 25,000 to 304,000 in the week ended Feb. 7, higher than forecast, from a revised 279,000 in the prior period, a Labor Department report showed Thursday in Washington. The median projection of 48 economists surveyed by Bloomberg called for 287,000. The four-week average dropped to the lowest since mid-November.
“There doesn’t seem to be a big shift in the trend in layoffs, and that’s really good for the labor market,” Gennadiy Goldberg, U.S. strategist at TD Securities USA LLC in New York, said before the report. “That’s finally filtering through to the consumer, leading to a big increase in confidence.”
Sustained demand gives hiring managers reason to retain staff, limiting dismissals. A healthier labor market that includes the biggest three-month gain in payrolls in 17 years will probably keep the Federal Reserve on course to raise interest rates later this year.
Estimates in the Bloomberg survey for jobless claims ranged from 275,000 to 300,000 after a previously reported 278,000 in the prior week.
Claims for Massachusetts were estimated because snowstorms delayed the state’s report, a Labor Department spokesman said as the figures were released to the press. The Labor Department’s estimate was “fairly close to their’s,” once the state’s figures were received, he said.
The four-week average of claims, a less-volatile measure than the weekly figure, declined to 289,750 from 293,000 in the prior week.
The number of people continuing to receive jobless benefits fell by 51,000 to 2.35 million in the week ended Jan. 31. The unemployment rate among people eligible for benefits held at 1.8% during that period. These data are reported with a one- week lag.
A sustained low level of firings has coincided with faster job gains. Payrolls climbed by 257,000 in January following increases in December and November that were bigger than initially reported, the Labor Department said on Feb. 6. Employment gains averaged 336,000 during the three months, the strongest since a comparable period ended in November 1997.
The jobless rate increased to 5.7% from 5.6% as more than a million Americans streamed into the labor force seeking work.
Among businesses adding to staff is Atlanta-based Home Depot Inc., which has started hiring 80,000 seasonal and part- time workers in preparation for the spring selling season, according to a company statement released Tuesday. That figure is comparable to the largest U.S. home-improvement retailer’s hiring plans last year around the same time.
The labor-market improvement has convinced Fed policy makers that they’re nearing a decision to raise their benchmark interest rate, now near zero, for the first time since 2006.
“At this point, raising rates in June looks like the attractive option for me,” Federal Reserve Bank of Richmond President Jeffrey Lacker, who has sought tighter monetary policy in the past, told reporters on Tuesday after a speech in Raleigh, North Carolina. “Data between now and then may change my mind, but it would have to be surprising data.”
San Francisco Fed President John Williams separately told the Financial Times the same day that the Fed was getting “closer and closer” to rate liftoff as he cited “really strong” hiring.