New jobless claims unexpectedly plunge to 601K

New applications for jobless benefits plunged to the lowest level in 14 weeks, a possible sign that the massive wave of layoffs has peaked. Still, the number of unemployed workers getting benefits climbed to a new record.

The Labor Department reported Thursday that the number of newly laid off workers applying for benefits dropped to 601,000 last week. That was far better than the rise to 635,000 claims that economists expected.

But the total number of people receiving jobless benefits climbed to 6.35 million, a 14th straight record.

The four-week moving average of initial jobless claims, which smooths out volatility, totaled 623,500 last week, a decrease of more than 30,000 from the high in early April. Goldman Sachs economists have said a decline of 30,000 to 40,000 in the four-week average is needed to signal a peak.

In a separate report, the government said that productivity, the key ingredient to rising living standards, grew at a 0.8% annual rate in the January-March quarter, slightly better than the 0.6% increase that economists had expected. Wage pressures, as measured by unit labor costs, increased at a 3.3% rate, down from a 5.7% surge in the fourth quarter.

The threat of any price spikes is seen as remote despite wage pressures outpacing productivity.

In another report, the Federal Reserve said consumer borrowing fell 5.2% in March, the biggest percentage decline since December 1990. In dollar terms, the $11.1-billion plunge was three times what economists expected.