Fewer people are seeking unemployment benefits than just three months ago — a sign that layoffs are falling sharply.
The number of people applying for benefits fell last week to 366,000, the fewest since May 2008. If the number stayed that low consistently, it would likely signal that hiring is strong enough to lower unemployment.
The unemployment rate is now 8.6 percent. The last time applications were this low, the rate was 5.4 percent.
The four-week average of weekly unemployment applications, which smooths out fluctuations, dropped last week to 387,750. That’s the lowest four-week since July 2008. The four-week average has declined in 10 of the past 12 weeks.
“Labor market conditions have taken a turn for the better in recent weeks,” Michael Gapen, an economist at Barclays Capital, said in a note to clients. “Payroll growth should improve in the coming months.”
Applications for unemployment benefits are a measure of the pace of layoffs. Job cuts have fallen sharply since the recession. Employers have been hiring at only a modest pace. But when applications fall below 375,000 — consistently — that usually signals that hiring is strong enough to lower the unemployment rate.
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