Applications for US unemployment benefits likely fell last week in sign of job market health

MarketsAssociated 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.

FALL BACK: Economists forecast that weekly applications dropped 17,000 to a seasonally adjusted 303,000, according to a survey by the data firm FactSet.

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That decline would chip away at the 40,000 applications that took place over the previous two weeks. Many economists blamed the increase on harsh winter weather that closed schools and shut down construction sites, causing temporary layoffs.

IMPORTANT SIGNAL: The applications are a proxy for layoffs. A sustained increase would suggest that hiring could slow from its currently robust levels.

The economy has faltered a bit in recent months, growing much more slowly than the 4.8 percent annual rate that it reached last spring and summer. Growth was just 2.2 percent in final three months of last year, and many economists expect similarly modest growth in the first three months of this year.

Still, employers added an average of 288,000 jobs a month from December through February, a strong pace that has lowered the unemployment rate to 5.5 percent. That suggests employers see the slowdown as temporary.

HIRING STRONG, PAY GAINS STILL WEAK: Nearly 3.3 million more Americans are earning paychecks compared with 12 months ago. That should boost spending and the economy for the rest of this year.

The strong job gains have yet to translate into higher pay. Average hourly earnings rose 2 percent in February from a year earlier, down from a 2.2 percent annual gain in the previous month.

Paychecks could pick up soon, however. More Americans are quitting their jobs, a report Tuesday showed, meaning that more are moving on to better, usually higher paying positions. That can force employers to pay more to attract and keep workers.