WASHINGTON – The outlook for the U.S. job market brightened a little Thursday after the government said fewer people applied for unemployment benefits last week and surveys of private companies showed hiring increased in June.
The economy is still far from healthy. U.S. service companies grew more slowly last month. Retail sales figures were disappointing. And central banks in Europe and China cut their interest rates, an indication that they expect weaker growth ahead.
But despite all the gloom, American factories and service firms kept hiring in June. Economists say that suggests many companies are less worried that the spring slump will endure.
It is beginning to look like the labor market is not nearly as weak as feared, Joel Naroff, chief economist at Naroff Economic Advisors, said in a note to clients.
Weekly unemployment benefit applications dropped by 14,000 to a seasonally adjusted 374,000, the Labor Department said Thursday. Thats the fewest since the week of May 19.
Payroll provider ADP said businesses added 176,000 jobs last month.
Thats better than the revised total of 136,000 jobs it reported for May and, if sustained, would be enough to lower the unemployment rate.
A report on U.S. service companies, which employ 90 percent of workers in the economy, showed challenges still exist.
The Institute for Supply Management said its index of non-manufacturing sector growth fell last month to 52.1. Thats down from 53.7 in May and the lowest reading since January 2010.
Still, any reading above 50 signals growth. The sector has been growing since December 2009.
The report covers a range of businesses, from retail stores and restaurants to health care companies and financial services firms.