First-time unemployment claims drop to 209,000 in early August

The economy has slowed, but companies are still growing fast enough to hang on to the vast majority of their workers. The rate of layoffs in early August clung near a half-century low.

The numbers: The number of people who applied for unemployment benefits in early August fell back near post 2008 recession lows, signaling the labor market remains quite strong even though the economy has softened.

Initial jobless claims, a rough way to measure layoffs, dropped by 8,000 to a seasonally adjusted 209,000 in the seven days Aug. 3, .

Economists polled by MarketWatch estimated new claims would total 215,000.

Jobless claims are one of the first economic signposts to turn south when the economy starts to go sour. There’s been no sign of any slippage yet with the economy now in a record 11th year of expansion.

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What happened: Raw or unadjusted jobless claims fell the most in Illinois and California. The only state to post a sizable increase was Washington. Most states showed little change.

The more stable monthly average of new jobless claims, meanwhile, slipped by 250 to 212,250. The four-week average gives a more accurate read into labor-market conditions than the more volatile weekly number.

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The number of people already collecting unemployment benefits, known as continuing claims, declined by 15,000 to 1.68 million. These claims are near the lowest level since the early 1970s.

Big picture: The U.S. stock market has been rocked by an intensifying trade dispute with China, but the economy itself is still growing at a steady pace.

The question is whether the U.S. can keep going strong when the rest of the world is struggling. Weaker global economic growth has sapped U.S. exporters, especially manufacturers, while the trade dispute with China has played havoc with farmers. Business investment has also slackened off.

The first big warning sign likely will come if new jobless claims start to climb to 250,000 or higher. They’ve clung between a narrow range of 200,000 to 230,000 for most of the past year.

Market reaction: The Dow Jones Industrial Average and the S&P 500 index were set to open slightly higher in Thursday trades. Stocks have tumbled this week after the U.S. trade spat with China took a turn for the worse.

The 10-year Treasury yield stood at 1.72%. Just 10 months ago, the yield reached a seven-year high of 3.23%. The sharp decline reflects growing worries about the economy triggered in part by rockier relations with China.

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