Claims For Unemployment Benefits Fell Sharply In July

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shutterstock_104939354Economists are all smiles about a piece of good news from the Labor Department, released late last week: claims for unemployment benefits fell in July to their lowest level since November 2007.

According to USA Today, claims for unemployment benefits fell to a six-year low in July. In that month, there were 335,500 benefits claims, down 6,250 from the month before. This represents the lowest number of claims filed since the onset of the recession, and was somewhat surprising in the face of disappointing job growth numbers in June.

Overall, claims for unemployment benefits are down 10% since the beginning of the year. This is happy news for economists and market watchers, as fewer claims for unemployment benefits can be interpreted to mean that fewer people in the U.S. are looking for work. This, of course, doesn’t necessarily mean that everyone who wants to be working full time has had success in finding a job. Indeed, a drop in claims for unemployment benefits could mean that people have simply stopped qualifying for such benefits, not that they’ve returned to the labor force. It could also indicate that a large number of workers have involuntarily retired.

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Nevertheless, it is true that job layoffs in the U.S. have dropped substantially since the beginning of 2013 and that the unemployment rate fell to 7.4% in July, an improvement over 7.6% in June. Improvements in the job market have been slow to realize, despite other positive economic news, but they are starting to be felt. It’s unlikely that we’ll see a return to full employment (usually viewed as an unemployment rate of 5%-5.5%) before the end of the year, but movement in the right direction is finally starting to pick up.