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Weekly jobless claims hit lowest level in 8 years

WASHINGTON - The number of people seeking U.S. unemployment benefits fell last week to its lowest level in eight years.

Weekly applications for unemployment aid dropped 19,000 to a seasonally adjusted 284,000, the Labor Department said Thursday. That's the lowest reading since February 2006, nearly two years before the Great Recession began.

The four-week average, a less volatile measure, declined 7,250 to 302,000. Claims for jobless aid have been falling for the past three months.

"Some of the recent decline in claims may reflect seasonal adjustment problems relating to annual summer shutdowns in the auto sector, although even before the last few weeks the data were extremely encouraging," said Jim O'Sullivan, chief economist with research firm High Frequency Economics.

"The decline helps corroborate the pick-up in payrolls to 231,000 per month so far this year from 194,000 last year; that is clearly much more than enough to keep unemployment trending down," he added.

Applications are a proxy for layoffs. When employers hold onto their workers, it's a sign of potential income gains, increased hiring and confidence that the economy will grow.

The decline in people applying for benefits buttresses other reports that the economy is improving.

Employers added 288,000 jobs in June, the fifth straight month of job gains above 200,000. That's the first such stretch since 1999, during the height of the dot-com boom. The unemployment rate has fallen to 6.1 percent, the lowest since September 2008.

Total layoffs in May dropped below pre-recession levels, the government said in a separate report. Job openings are at their highest level in seven years, while more workers are quitting their jobs. Workers usually quit when they have an offer for a better position or confidence that they can find one.

Still, the job growth has done little to lift wages significantly. Wage growth has barely matched inflation during the economic recovery.

"The one big missing piece in the labor market recovery is wage growth, which remains soft. But as the job market continues to tighten firms will need to raise wages to retain their current workers and hire new ones, and wage growth will accelerate through the rest of this year and into 2015. This will also help bring people back into the labor force," said Stuart Hoffman, chief economist at PNC Financial Services Group.

More people with jobs increases the total number of paychecks, which could boost consumer spending and growth. After a sharp contraction in the economy in the first three months of the year, most economists expect growth to return in the April-June quarter and exceed 3 percent at an annual pace in the second half of 2014.