New claims for unemployment benefits were little changed last week, a government report showed on Thursday, pointing to a marginal improvement in the labor market. Initial claims for state unemployment benefits nudged down 1,000 to a seasonally adjusted 400,000, the Labor Department said.
Economists had forecast claims rising to 405,000. The claims data falls outside the survey period for the government’s closely monitored employment report for July, which is scheduled for release on Friday. Nonfarm payrolls likely increased 85,000 last month, according to a Reuters survey, after rising only 18,000 in June.
The unemployment rate is expected to hold steady at 9.2 per cent. “The real problem is the lack of new hiring, which is absolutely critical. We’ve seen some improvement with smaller firms hiring more people again,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida. Stock index futures trimmed losses on the data, while government bonds held their gains.
The labor market is being closely watched for any signal the economy is regaining speed after growth stalled in the first half of this year. Gross domestic product grew at an annual pace of 1.3 per cent in the second quarter after a negligible 0.4 per cent rate in the January-March period. Data so far show the anemic growth pace persisted early in the third quarter, with manufacturing activity hitting a two-year low in July and the services sector expanding at its slowest pace in nearly 1-1/2 years. Jobless claims are hovering around 400,000 and need to decisively break beneath that level to signal a sustainable improvement in the labor market.