WASHINGTON – Slightly more Americans sought unemployment benefits last week, but the overall levels still remain near historic lows in a positive sign for the job market.
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THE NUMBERS: Applications for jobless aid rose 2,000 to a seasonally adjusted 263,000, matching its four-week moving average, the Labor Department said Thursday. The number of people collecting unemployment checks has fallen 4.4 percent from a year ago to 2.16 million.
Weekly requests for jobless benefits have stayed below the threshold of 300,000 for 78 straight weeks, the longest streak since 1970. This indicates that employers are holding onto their workers in the belief that the broader U.S. economy will continue to grow.
THE TAKEAWAY: The job market appears to be on firm footing, because jobless claims are often viewed as a proxy of layoffs. The modest level indicates that many employers view their businesses as stable or expanding, an outlook that would lead to additional hiring as the economy continues its seventh year recovering the Great Recession.
With fewer workers seeking unemployment benefits, the government's employment report being released Friday is expected to show solid hiring levels in August. A survey of economists has estimated that employers added 180,000 jobs last month with the unemployment rate ticking down to 4.8 percent, according to data provider FactSet.
KEY DRIVERS: Job growth has remained relatively healthy, despite weak economic growth in the first half of 2016.
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Employers added 255,000 jobs in July and 292,000 in June as the unemployment rate held at 4.9 percent.
The economy expanded at an annual pace of 1.1 percent from April through June after growing a mere 0.8 percent in the first quarter. Many economists say that growth should accelerate in the second half of the year.
Still, the divide between hiring and growth is potentially worrisome. It indicates that the economy is becoming less productive, as measured by the output for each hour worked. Over the past 12 months ended in June, labor productivity has fallen 0.4 percent, according to a separate government report released Thursday.
Falling productivity means that employers must hire more workers to sustain growth, but it also can stifle wage growth since workers are generating less value for each hour on the job.