Jobless Claims Edge Up, But Labor Market Still Solid

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Unemployment Benefits
APA job seeker fills out an application during a National Career Fairs job fair in Chicago.
By Lucia Mutikani

The number of Americans filing new applications for unemployment benefits rose less than expected last week, suggesting labor market conditions are continuing to tighten.

Initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 270,000 for the week ended Aug. 1, the Labor Department said on Thursday. It was the 22nd consecutive week that claims held below the 300,000 threshold, which is associated with a strengthening labor market.

"The unemployment claims are consistent with continued solid job creation and a reduction in labor market slack over time," said John Ryding, chief economist at RDQ Economics in New York.Economists had expected claims to rise to 273,000 last week. The data has no bearing on Friday's employment report for July. According to a Reuters survey of economists, nonfarm payrolls likely increased by 223,000 last month, matching June's gain.Though job growth has slowed from last year's brisk pace, the unemployment rate, at 5.3 percent, is near the 5.0 percent to 5.2 percent range that most Federal Reserve officials consider consistent with full employment.

Last week, the Fed upgraded its assessment of the jobs market, describing employment gains as "solid." The U.S. central bank, which is expected to raise interest rates this year for the first time in nearly a decade, also said labor market slack had diminished "since early this year."

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 6,500 to 268,250 last week.

U.S. stocks fell, while prices for U.S. Treasuries rose. The U.S. dollar was little changed against a basket of currencies.

A separate report from global outplacement consultancy Challenger, Gray & Christmas showed planned job cuts by U.S. employers surged 136 percent to near a four-year high of 105,696 workers in July.

The U.S. Army, which plans to eliminate about 57,000 troops and civilian employees over the next two years, accounted for more than half of the planned job cuts last month.

Economists, however, expect minimal impact on the labor market from the layoffs, as military personnel are not included in the monthly payrolls count.

"The impacts are expected to be almost negligible given the size of the announced job cuts relative to the overall labor force as well as the fact that unemployment rates for veterans tend to not be that much different than unemployment rates for non-veterans," said Daniel Silver, an economist at JPMorgan in New York.

Employers in the technology sector, including Microsoft, Qualcomm and Intel Corp, announced 18,891 job cuts in July.

(Reporting by Lucia Mutikani; Editing by Paul Simao)
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