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Government data showed an increase in the number of claims for unemployment benefits in the US, but it did little to sway sentiments away from an improving labor market.
According to figures released by the Labor Department on Thursday, claims for state benefits climbed by 21,000 instances in the week that ended on August 9th to reach a seasonally adjusted total of 311,000. Despite exceeding the expectations of a rise to only 295,000, economists believe that the slow pace of layoffs shows the strength of the labor market.
Earlier this week, separate data showed that hiring reached its highest level in more than six years during the month of June. The number of job openings during the same month was at a thirteen year high.
The gains made by the labor market over the past several months have fueled investors to bed on the Federal Reserve deciding to raise up interest rates sooner than expected. The central bank has held its rates near zero for the past six years and has not shown any intention of accelerating its schedule to before 2015. Bank chair Janet Yellen cites slack in the labor market due to a slow growth in wages as a major reason for holding back rate hikes.
Chief economist John Ryding from New York’s RDQ Economics expects that, "The August jobs report will be very solid, which will bring the Fed one step closer, in our opinion, to shifting guidance about the timing of the first rate hike, which we continue to believe will be March 2015."
The US economy performed strongly during the second quarter by posting a growth rate of 4%. Analysts believe the pace of expansion is slowing down in the current quarter behind Wednesday’s weak retail sales figures which could point towards stagnant incomes.
