Economic Report: U.S. jobless claims fall to 216,000 — no sign layoffs are on the rise

Job seekers fill out registration forms at the San Francisco jobs fair. The U.S. labor market is stronger than it’s been in decades.

The numbers: The number of people who applied for unemployment benefits in mid-June fell to a one-month low and clung near the lowest level in decades, a sign the labor market remains robust even after a slowdown in hiring and softer economic growth.

Initial jobless claims, a rough way to measure layoffs, fell by 6,000 to 216,000 in the seven days June 15, the government said Thursday.

Economists polled by MarketWatch estimated new claims would total a seasonally adjusted 220,000.

The more stable monthly average of new claims edged up by 1,000 to 218,750. The four-week average gives a more accurate read into labor-market conditions than the more volatile weekly number.

The number of people already collecting unemployment benefits, known as continuing claims, declined by 37,000 to 1.66 million. These claims are near the lowest level since the early 1970s.

What happened: Jobless claims have drifted higher after briefly dipping below 200,000 in early April for the first time since 1969. They are still extremely low by historical levels, but they are being watched more closely given a slower pace of hiring and weaker U.S. growth.

Read: Why long periods of the U.S. going without recession may be bad for the economy

Also Read: MarketWatch interview with Deutsche Bank’s Jim Reid on a crisis-filled future

Big picture: The strong labor market is the biggest shield against recession. The economy will be OK if layoffs remain low, but if they start to rise it would be a signal the U.S. has taken a turn for the worse. Faster layoffs would almost certain induce the Federal Reserve to cut interest rates.

Market reaction: The Dow Jones Industrial Average DJIA, +0.15% and S&P 500 SPX, +0.30% were set to open sharply higher in Thursday trades. Stocks have climbed close to record highs on the growing expectation the Federal Reserve will cut interest rates in the near future.

The 10-year Treasury yield TMUBMUSD10Y, -0.60% was little changed at 2.11%.

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