Jobless claims drop to lowest level in 7 years

The fewest Americans in seven years filed applications for unemployment benefits last week as the labor market continued to improve.

Jobless claims dropped by 24,000 to 297,000 in the week ended May 10, less than any economist projected in a Bloomberg survey and the least since May 2007, figures from the Labor Department showed today in Washington. The median estimate of 49 economists surveyed was 320,000.

Firings have been slowing, setting the stage for continued growth in employment and wages. While payrolls rebounded in April after the holidays and a weather-induced soft patch earlier in the year, many companies are proceeding with caution until they see a sustained pickup in consumer spending, which accounts for about 70 percent of the economy.

“The way the job market continues to improve, the number of people collecting benefits keeps going down,” said Brian Jones, senior U.S. economist at Societe General in New York. “The labor market is fine.” Jones had the lowest forecast in the Bloomberg survey, at 303,000.

Stock futures remained lower after the report, with the contract on the Standard & Poor’s 500 Index expiring next month declining 0.2 percent to 1,882.00 at 8:52 a.m. in New York.

Economists’ estimates in the survey ranged from 303,000 to 330,000. The prior week’s reading was revised to 321,000 from an originally reported 319,000.

No states were estimated last week and there was nothing unusual in the data, a Labor Department spokesman said as the figures were released to the press.

Another Labor Department report today showed the cost of living rose in April reflecting broad-based increases from food and energy to cars and rents. The consumer price index increased 0.3 percent, the biggest gain since June, after rising 0.2 percent the prior month. Stripping out volatile food and fuel, the so-called core measure increased 0.2 percent.

The four-week average of claims, a less-volatile measure than the weekly figure, dropped to 323,250 from 325,250 the week before.

The number of people continuing to collect benefits declined by 9,000 to 2.67 million in the week ended May 3, the fewest since December 2007.

The unemployment rate among people eligible for benefits held at 2 percent in the week ended May 3.

Employers added 288,000 jobs last month, the biggest increase in payrolls since January 2012, the Labor Department reported May 2. Among them were automakers, which are expanding operations amid rising sales.

Chrysler Group LLC has hired 250 workers at its new factory in Tipton, Indiana, where it will make transmissions for Jeep Cherokees and Chrysler 200 sedans. The carmaker, based in Auburn Hills, Michigan, expects to employ 600 workers at the site by the end of this year and 850 in 2015.

While automakers enjoy a recovery in sales, some retailers are reporting weak demand. Although the industry reported a 6.2 percent increase in sales in April from a year earlier, its biggest monthly gain since 2011, many merchants have been discounting aggressively. Some, including teen apparel chain Aeropostale Inc. and Elizabeth Arden Inc., are cutting workers as they shutter stores.

Cosmetics maker Elizabeth Arden suffered from sluggish demand in the first quarter, when an “unprecedented number” of stores were forced to close, Chief Executive Officer E. Scott Beattie said.