The number of first-time unemployment claims in the United States dropped to the lowest level in over 50 years last week, indicating that despite the uncertain global economic outlook, the American job market remains stable.
According to the U.S. Department of Labor’s report on Thursday, for the week ending July 18, the number of initial claims for unemployment benefits unexpectedly decreased by 22,000 nationwide, adjusted for seasonal factors to 187,000 people, hitting the lowest level since September 1969. This figure is significantly lower than economists’ expectations. Economists surveyed by Reuters had predicted a slight increase to 212,000 initial jobless claims last week; analysts surveyed by FactSet had forecasted a slightly higher number of 215,000.
The data released on Thursday also showed that the four-week moving average of initial claims for unemployment benefits in the country decreased by 7,250 people last week, dropping to 207,500 people.
The data on continued claims for unemployment benefits lags by one week. For the week ending July 11, the total number of people receiving unemployment benefits in the United States decreased by 2,000 individuals, falling to just under 1.8 million people, which is at a relatively healthy level historically.
Weekly initial jobless claims are typically seen as an indicator of business layoff situations and almost a real-time indicator of the health of the American job market.
Despite the surge in oil prices due to the Iran war, the U.S. job market remains healthy, with layoffs remaining at historically low levels. However, some analysts believe that the Iran war poses downside risks to the labor market, and if the war continues for a prolonged period with energy costs remaining higher than normal, it may eventually force companies to cut costs through layoffs, weakening the labor market.
The June employment report released earlier this month by the U.S. Bureau of Labor Statistics showed that American businesses scaled back hiring last month, adding only 57,000 new jobs, less than half the amount from the previous month. This indicates that companies are still cautious in expanding their workforce. The unemployment rate for June also dropped from 4.3% in May to 4.2%, hitting the lowest point in a year.
Although job growth was lackluster in June, the relatively strong employment numbers from the previous three months have alleviated concerns that the impact of the Iran war could plunge the U.S. job market into hardship.
Since the U.S. economy emerged from the recession during the pandemic, weekly initial unemployment claims have mostly stayed between 200,000 and 250,000 people.
(*This article referenced reporting from the Associated Press.)