Data released on Thursday by the U.S. Labor Department shows that fewer Americans filed applications for unemployment benefits last week, making it the lowest level in four decades.
The advance figures for the seasonally adjusted initial claims in the week ending on July 18 was at 255,000, 26,000 lower than the unrevised level of 281,000 claims the previous week. The last time jobless claims were this low was on November 24, 1973 when it was at 233,000.
Bloomberg reports that the figures beat the median forecast of 47 economists they surveyed. The economists call for the claims to decrease to 278,000.
Figures for the four-week moving average, a less volatile measure than the weekly numbers, also decreased to 278,500, a 4,000 decrease from the previous week's unrevised average of 282,500.
The data show that the U.S. labor market has been steadily growing. A good sign for the economy, which relies heavily on consumer spending.
Bloomberg reports that several automakers like General Motors Co. and Ford Motors Co. are benefiting from the improving finances of Americans.
Kurt McNeil, GM's U.S. vice president of sales operations, said that the auto industry just wrapped up their "best six months in a decade."
"People feel good about their jobs and the direction the economy as a whole is taking, so the second half of the year should be strong, too," he said to Bloomberg.
Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit offered an insight to the continued improvement in the labor market.
"Companies are holding on to employees because they're needed not just to satisfy current demand, but also for growth initiatives," he said to Bloomberg. "It's yet another sign we're likely to see solid economic expansion in the second half."
A report from Reuters, though, states that the drop in claims last week likely exaggerated the strength of the labor market as summer is a volatile period for claiming unemployment benefits due to automakers usually shutting assembly plants for annual retooling.
Still, the continued decline of claims in the month of July is a welcomed change, compared to the claims rise in June.
