The number of people filing for unemployment benefits fell for the fourth week in a row, according to data released by the Department of Labor on Thursday.
Claims for last week, which cover the period covering the Labor Day holiday, totaled 276,000, down 7,000 from the previous week and falling below the key 800,000 level for the first time since February.
The U.S. economy has been growing strongly since 2015, and unemployment has dropped to a near 50-year low of 3.7 percent.
Despite the drop in claims, analysts say that continued low unemployment levels could help fuel a revival in inflation pressures.
“The ongoing low unemployment trend may increase the odds of stronger wage growth or of companies raising prices more aggressively, both of which can add to inflationary pressures,” said Samuel Coffin, an economist at Bloomberg Economics.
“This is likely to be a problem for the Trump administration, which has promised to ease into tax cuts by year-end with the aim of boosting the economy a full percentage point in 2020,” he added.
And the Bloomberg economist said the upcoming election may also add volatility to the data on average hourly earnings.
“The Federal Reserve has said that it is looking for signs of wage gains to cause it to raise interest rates more quickly,” Coffin said. “The probability that policy makers will raise rates at their December meeting now is 50 percent, which is a big jump from the 26 percent in October, just before the governors called the election and started to make their public statements.”
Still, economists say that expectations the economy can rise to 3 percent or even 4 percent growth are a sign of health.
“Over the past three years, real economic growth has only exceeded 3 percent once – in the first quarter of 2017,” said Daniel Silver, an economist at JPMorgan. “Normally, before [the election], growth would be at or below 2 percent.”
“So we have renewed confidence the economy can achieve 3 percent or better growth over the next couple of years – indeed, should be able to exceed it by half a percentage point,” he added.