The number of Americans filing for unemployment benefits rose less than expected last week, pointing to sustained labor market strength that could push the Federal Reserve closer to raising interest rates.
Other data on Thursday showed planned layoffs by U.S.-based employers decreased 29 percent in August and labor costs in the second quarter rose far more than previously reported.
Initial claims for state unemployment benefits increased 2,000 to a seasonally adjusted 263,000 for the week ended Aug. 27, the Labor Department said on Thursday. Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 265,000 in the latest week.
It was the 78th consecutive week that claims remained below the 300,000 threshold, which is associated with a robust labor market. That is the longest stretch since 1970, when the labor market was much smaller.
With the labor market nearing full employment, there probably is limited scope for further declines in claims.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1,000 to 263,000 last week.
U.S. stock futures trimmed gains after the data, while U.S. Treasury prices were little changed. The dollar was slightly higher against a basket of currencies.
The claims data has no bearing on Friday’s employment report for August as it falls outside the survey period. Layoffs declined last month.
UNIT LABOR COSTS JUMP
In a separate report, global outplacement consultancy Challenger, Gray & Christmas said employers in the United States announced plans to shed 32,188 workers from their payrolls in August, down from 45,346 in July.
The computer sector dominated job cuts last month, with Cisco Systems announcing plans to reduce its workforce by 5,500. There were also layoffs in the energy, industrial goods and entertainment and leisure sectors.
According to a Reuters survey of economists, nonfarm payrolls likely increased by 180,000 jobs in August after rising by 255,000 in July. The unemployment rate is seen falling one-tenth of a percentage point to 4.8 percent.
August’s anticipated step-down in job gains would follow two straight months of payroll increases above 250,000. Friday’s employment report could determine whether the Fed raises interest rates again later this month or in December.
The U.S. central bank increased its benchmark overnight interest rate last December for the first time in nearly a decade.
Sustained declines in worker productivity and a spike in labor costs in the second quarter could raise concerns about already tepid corporate profits, which could impact hiring.
In another report, the Labor Department said unit labor costs, the price of labor per single unit of output, increased at a 4.3 percent annual rate as opposed to the 2.0 percent pace reported last month.
The trend in labor costs growth, however, remains moderate. Unit labor costs rose 2.6 percent from a year ago.
Hourly compensation per hour jumped at a 3.7 percent rate in the second quarter instead of the previously reported 1.5 percent pace. Productivity, which measures hourly output per worker, dropped at a 0.6 percent annual rate instead of the 0.5 percent pace of decline reported last month. It was the third consecutive quarterly drop.