New claims for unemployment benefits fell 8,000 to 207,000 in the second week of July, the Department of Labor reported Thursday morning, the lowest such number since 1969.
Forecasters had expected new jobless claims to edge up to around 220,000. Instead, fewer people sought unemployment insurance than anytime in 48 years.
Thursday’s benchmark is especially impressive given that the labor force is twice as large as it was in late 1969.
Then, the unemployment rate was 3.5 percent, Richard Nixon was president, and “Na Na Hey Hey Kiss Him Goodbye” was the top song in the country.
Low claims are a sign of a healthy labor market. They indicate that layoffs are rare and that job creation is strong.
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Claims have stayed historically low in recent months, signaling that the jobs market is going to get better even with unemployment, at 4 percent, already near the lowest it has been in decades.
Thursday’s results are likely to reassure Federal Reserve officials that they right to pursue tighter monetary policy, and may even lead them to begin accelerating the pace of interest rate hikes.
The ultra-low claims are also likely to help convince Fed officials and the Trump administration that new hires are increasingly unlikely to come from the pool of unemployed workers. Instead, to maintain the strong job creation pace of recent months, employers will have to look for people who aren’t currently seeking jobs — that is, retirees, students, the disabled, and so forth.
“The irony is that factories cannot be brought back to America for now because there are no workers to man the machinery and tell the shop floor robots what to do,” noted Chris Rupkey, chief financial economist for MUFG. “The economy is at full employment is what jobless claims are screaming and there is no one left in America without a job.”
Over the past three months, the economy has added an average of 211,000 new jobs. That is more than twice as much as needed to keep the unemployment rate falling.
The combination of declining layoffs and increasing hiring does appear to have brought more people into the workforce. Over recent years, labor force participation has been flat even though the retirement of the Baby Boom generation means that it should fall.
Today, just above 79 percent of all prime-age workers have a job. That ratio is a strong as it has been since the spring of 2008, when the financial crisis began to accelerate.
Yet the economy still has a ways to go until the high-water mark of early 2000, when about 82 percent of those workers between ages 25 and 54 had jobs.
