WASHINGTON -- Fewer people sought U.S. unemployment benefits last week, evidence that employers remain confident in the economy and are laying off few workers.
The Labor Department said Thursday that weekly applications for unemployment aid dropped 6,000 to a seasonally adjusted 271,000. The four-week average, a less volatile measure, ticked up 1,000 to 272,500.
Applications are a proxy for layoffs and are at historically low levels, suggesting businesses are holding onto their staffs. Earlier this month, the four-week average stood at 266,000, the lowest since April 15, 2000.
Demand for skilled workers as the unemployment rate falls is persuading hiring managers to keep staffing levels consistent with sales. Pay raises, alongside strengthening job security, would help provide a bigger boost to consumer spending, which accounts for almost 70 percent of the economy.
"Companies are concerned that if they let people go, even if they're not their star employees, that it'll be difficult to replace them," Aaron Smith, senior economist at Moody's Analytics Inc. in West Chester, Pa., said before the report. "Wage pressures should be picking up, supporting the positive outlook for consumer spending."
The applications data will likely be closely watched in the coming weeks for any sign that companies are cutting jobs in the wake of the past week's stock market volatility and global economic turmoil. For now, the data suggests that hiring has remained solid this month.
Economic turmoil in China and uncertainty about the Federal Reserve's next moves on interest rates caused U.S, stocks to tumble for six straight days before recovering some lost ground Wednesday.
The stock market's violent swings reflect investors' fears that China's economy, the world's second largest, may be weakening more severely than its official data suggests. It has also revived fears about the U.S. economy's strength and the impact of the strong dollar on exports.
Applications for unemployment aid have been below 300,000, a historically low reading, since March. Economists frequently look to the applications data for early clues on how employers are responding to economic turmoil.
The number of people receiving unemployment aid rose 13,000 to 2.27 million. That figure has fallen 10 percent in the past year.
Contrary to the stock market's violent fluctuations, recent economic data has largely been positive. U.S. factories are receiving more orders for long-lasting manufactured goods, a sign that companies are spending more on industrial machinery, computers and other items that can be used to expand production.
And sales of new homes jumped 5.4 percent in July to a seasonally adjusted annual rate of 507,000, after a slide in June.
Consumer confidence rose to its highest level in seven months in August, the Conference Board said Tuesday, though the report was compiled before the stock market's gyrations began last week.
No states estimated unemployment-benefit applications last week and there was nothing unusual in the data, according to the Labor Department.
Information for this article was contributed by Michelle Jamrisko of Bloomberg News.
Business on 08/28/2015