WASHINGTON — Fewer Americans filed applications for unemployment benefits over the past month than at any time in 14 years as an improving economy prompted employers to hold on to staff.
The four-week average of jobless claims, a less-volatile measure than the weekly figure, dropped to 281,000, the lowest since May 2000, from 284,000 the week before, a Labor Department report showed Thursday in Washington. The reading for the week ended Oct. 18 climbed by 17,000 to 283,000, in line with the median forecast of 52 economists surveyed by Bloomberg.
Sustained demand for goods and services is encouraging companies to retain workers, even as economic growth slows abroad. As a result, firings have hovered near historically low levels while gains in payrolls also bolster total income, giving households the confidence and the means to spend.
“The labor market is continuing to get better,” said Robert Stein, deputy chief economist at First Trust Portfolios in Wheaton, Illinois, who accurately forecast the rise in initial claims. “We’re going to get another solid number for payrolls in October.”
There was nothing unusual in the data and no states were estimated, a spokesman said as the figures were released.
Estimates from economists in the Bloomberg survey ranged from 255,000 to 300,000. The prior week’s claims were revised to 266,000 from an initial reading of 264,000, the lowest level since April 2000.
The number of people continuing to receive jobless benefits dropped by 38,000 to 2.35 million in the week ended Oct. 11, the fewest since December 2000.
In that same period, the unemployment rate among people eligible for benefits held at 1.8 percent, the report showed.
Initial jobless claims reflect weekly firings and typically decrease before job growth can accelerate.
“Companies are very reluctant to lay off the workers they already have on the payroll,” said Stein. “They expect demand to pick up and they expect more of what we call plow-horse economic growth – slow and steady.”
Companies such as chipmaker Advanced Micro Devices Inc. continue to slash headcount as they restructure their business, cut costs or grapple with industry competition.
AMD, which is losing share in processers to Intel Corp., said it’s cutting 7 percent of its global workforce – about 710 jobs – by the end of the fourth quarter. The reductions will result in savings of about $85 million next year, the company said.
Federal Reserve policymakers are debating how much longer to keep interest rates near zero as the labor market improves and they also contend with global weakness that threatens to derail their U.S. inflation goals.
The central bank said last month that asset purchases would probably end after its next meeting, on Oct. 28-29, and reiterated that rates would remain on hold for a “considerable time” after the program ends.
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