Payrolls opening act signals sustained U.S. job-market progress

Employers are holding onto workers in anticipation of a falling U.S. jobless rate that would make it difficult to replace those let go.

The level of claims for unemployment benefits remains close to the lowest in four decades, even as applications climbed by 3,000 to 270,000 in the week ended Aug. 1, figures from the Labor Department showed Thursday.

A dearth of firings often comes hand-in-hand with gains in hiring that boost household incomes and spending, which in turn propel economic growth. A report Friday is projected to show payrolls kept growing in July and the unemployment rate held at the lowest level in seven years, which may help convince Federal Reserve policy makers that the economy can withstand an increase in the benchmark interest rate this year.

“The labor market stands in a fairly healthy position,” said Millan Mulraine, deputy head of research and strategy at TD Securities (USA) LLC in New York. “The economic recovery has regained some positive momentum and that’s likely to translate into further acceleration in job growth in the next few months.”

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The median forecast of 41 economists surveyed by Bloomberg projected claims would rise to 272,000, with estimates ranging from 262,000 to 280,000. The previous week’s figure was unrevised at 267,000, and the 255,000 reading two weeks earlier was the lowest since November 1973.

Lower average

The four-week moving average, a less volatile measure than the weekly numbers, decreased to 268,250 last week, the second lowest since 2000.

Since early March, claims have remained below the 300,000 level that economists say is typically consistent with an improving job market. This is the longest stretch since 1972.

Such job security is doing little to bolster confidence. The Bloomberg Consumer Comfort Index eased to 40.3 in the period ended Aug. 2, the second-worst reading since November, another report showed Thursday.

While views of the economy improved, the measure of household finances dropped to the weakest level since October and attitudes about the buying climate reached a seven-week low.

While more Americans are finding work, it may be that those with jobs have yet to see the kinds of gains in wages that would inspire more confidence.

A Labor Department report on Friday is projected to show employers added 225,000 workers to payrolls last month, while the jobless rate held at 5.3 percent, the lowest since April 2008.

Fed policy makers last week said they’d like to see some additional improvement in the labor market before they decide to raise the benchmark interest rate for the first time since 2006. The majority of economists surveyed by Bloomberg in July favored a September lift-off.

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