Applications for US unemployment aid likely fell slightly last week as layoffs stay low

EnergyAssociated Press

The U.S. Labor Department reports on the number of people who applied for unemployment benefits last week at 8:30 a.m. Eastern Thursday.

SMALL DECLINE: Economists forecast that weekly applications slipped 5,000 to 290,000 last week, according to a survey by the data firm FactSet.

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The weekly applications are a proxy for layoffs, and they have been below 300,000 for seven weeks. That is a historically low level that is typically consistent with solid job gains.

GOOD SIGN FOR GROWTH: The economy is stumbling through a period of slower growth, but employers haven't been spooked enough yet to cut jobs. That suggests that the growth slowdown may be temporary.

The economy expanded at just a 0.2 percent annual rate in the first three months of the year, the government said Wednesday. That's the weakest showing in a year and a sharp slowdown from the 3.6 percent pace in the final six months of last year. Consumers cut back on spending and businesses sharply reduced their investment in new oil and gas drilling, in response to cheaper oil. The strong dollar also weighed on exports and widened the trade gap, slowing growth.

In addition, hiring was weak in March. Employers added just 126,000 jobs that month, the fewest in 15 months and snapping a year-long streak of monthly gains above 200,000. The unemployment rate remained 5.5 percent.

Yet unemployment benefit applications are at rock bottom. The four-week average of applications, a less volatile measure, is near its lowest level in 15 years. For those with jobs, the chances of getting laid off are very low.

Despite weak first-quarter growth, most economists expect consumer spending will pick up later this year. That should boost growth back to its recent trend of about 2.5 percent a year.