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Jobless claims rise from three-month low

Welder sparks hot jobs
Tristan Savatier | Getty Images

The number of Americans filing for unemployment benefits rebounded from a three-month low last week, but remained below a level consistent with a tightening labor market.

Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 244,000 for the week ended July 22, the Labor Department said on Thursday.

Data for the prior week was revised to show 1,000 more applications received than previously reported. Economists polled by Reuters had forecast claims rising to 241,000.

It was the 125th straight week that claims remained below 300,000, a threshold associated with a robust labor market. That is the longest such stretch since 1970, when the labor market was smaller. The labor market is near full employment, with the jobless rate at 4.4 percent.

Claims have been volatile in recent weeks as automakers shut assembly plants for annual retooling. Some manufacturers like General Motors <GM.N> are extending their summer shutdowns to manage excess inventory from declining sales.

Economists say this could be throwing off the model used by the government to strip out seasonal fluctuations from the data, causing swings in the weekly numbers.

A Labor Department official said there were no special factors influencing the claims data and that no states had been estimated.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, was unchanged at 244,000 last week.

Labor market strength likely keeps the Federal Reserve on track to announce a plan to start reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities in September and raise interest rates in December for a third time this year, despite a recent moderation in inflation pressures.

The U.S. central bank left rates unchanged on Wednesday and said it expected to start winding down its portfolio "relatively soon."

Thursday's claims report also showed the number of people still receiving benefits after an initial week of aid fell 13,000 to 1.96 million in the week ended July 15. The so-called continuing claims have now been below 2 million for 15 straight weeks, pointing to diminishing labor market slack.

The four-week moving average of continuing claims rose 4,750 to 1.96 million, remaining below the 2 million mark for 13 consecutive weeks.

The continuing claims data covered the survey period for July's unemployment rate. The four-week average of continuing claims increased 25,750 between the June and July survey weeks, suggesting an uptick in the unemployment rate.