The number of Americans filing new claims for unemployment aid fell to near a 49-year low last week and private payrolls rose steadily in August, pointing to sustained labor market strength that should continue to underpin economic growth, according to Reuters.
The economy so far appears to be weathering an escalating trade war between the United States and China as well as tensions with other trade partners, including Canada, the European Union and Mexico, which have rattled financial markets.
This likely keeps the Federal Reserve on track to raise interest rates this month for the third time this year.
“The economy is in overdrive with jobless claims at lows not seen since the 1960s, and this gives the Fed the green light to raise interest rates later this month and take away some of the economy’s punch,” said Chris Rupkey, chief economist at MUFG in New York.
The Labor Department said on Thursday initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 203,000 for the week ended Sept. 1, the lowest level since December 1969.
Economists polled by Reuters had forecast claims rising to 214,000 in the latest week. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,750 last week to 209,500, also the lowest level since December 1969.
Though there have been reports of some companies either planning job cuts or laying off workers because of uncertainty caused by the Trump administration’s protectionist trade policy, that has not yet been reflected in the claims data.