Applications for US unemployment benefits likely fell last week as job market improves

Economic IndicatorsAssociated Press

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

SOLID DROP: Economists forecast that weekly applications fell 14,000 to a seasonally adjusted 290,000, according to a survey by the data firm FactSet.

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Applications are a proxy for layoffs. A drop to that level would suggest companies are cutting very few workers. Applications below 300,000 are typically consistent with healthy job gains.

The four-week average of applications, a less-volatile measure, has fallen 14 percent in the past year to 289,750. That is a very low level historically.

BUSINESSES ON A HIRING SPREE: Applications have remained near or below 300,000 since September, a sign that employers are holding onto their workers.

The low level of applications has also coincided with a big step-up in hiring. Employers have added more than 1 million jobs just since November, the best three-month pace since 1997.

And more than 3.2 million jobs have been created in the past year. That helped lower the unemployment rate to 5.7 percent in January from 6.6 percent 12 months earlier.

The strong job gains are showing signs of finally starting to lift paychecks for more workers. Average hourly pay rose 0.5 percent in January, the most in six years, the Labor Department said earlier this month. While economists cautioned against reading too much into one month's figure, it suggested employers may finally feel the need to raise wages to attract new workers and keep the ones they have.

Other reports also point to a strong job market. The number of available jobs posted by employers rose in December to a 14-year high, the government said last week.

And the number of people quitting also picked up 2.1 percent from the previous month. More quits are a sign of confidence in the economy, because people typically quit when they have another job lined up, usually at higher pay, or are optimistic that they can find a new position.