WASHINGTON -- Initial unemployment claims dropped back to a level indicating moderate job growth last week after a spike the previous week raised alarms about the labor market recovery.
The number of people filing for unemployment benefits for the first time stood at 340,000 for the week ending Saturday, falling from a revised 363,000 the week before, the Labor Department said Thursday.
Economists had expected the closely watched jobless claims figure to drop last week to 345,0000.
Claims for the week ending May 11, which were revised up from 360,000, had the biggest one-week jump since last fall and were the most since March.
The jump surprised analysts after steady improvement had brought the number of claims below 330,000 for the first time since early 2008, when the Great Recession had just begun.
Economists say jobless claims less than 350,000 a week indicate a moderately growing labor market.
The weekly figures can gyrate based on weather, holidays, data problems and other factors. The less-volatile four-week average was 339,500 last week, down 500 from the previous week.
The increase in the week ending May 11 was partly attributed to a jump of 15,060 first-time claims in California because of service-industry layoffs, the Labor Department said Thursday. There is a one-week lag in data about claims in individual states.
Investors and analysts are watching the jobless figures to try to determine when the Federal Reserve might start pulling back its unprecedented stimulus efforts.
Fed Chairman Ben S. Bernanke roiled financial markets Wednesday when he suggested that the central bank could start reducing the $85 billion in bonds it buys each month by September if the outlook for the labor market improves substantially.
The unemployment rate dropped to 7.5% in April as the economy added 165,000 net new jobs.