Initial jobless claims drop to 334,000

WASHINGTON -- New jobless claims dropped more than expected last week, nearing a five-year low and continuing a downward trend this month that bodes well for the labor market.

There were 334,000 people who applied for unemployment benefits for the first time in the week ending Saturday, down 12,000 from the previous week, the Labor Department reported Thursday. It was the second significant weekly drop.

Analysts had expected claims to hold steady at 346,000 last week.

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The five-year low was 327,000, at the end of April.

The weekly numbers can vary widely. The less volatile four-week average also moved down last week by 7,250, to 345,250.

Economists say that claims below 350,000 a week indicate a moderately growing labor market. The recent figures are consistent with a continuation of the May jobs-growth pace of 175,000.

Investors and analysts are watching labor market indicators closely for hints of when the Federal Reserve will start reducing its economic stimulus efforts. Fed policymakers are scheduled to meet next week, but are not expected to start tapering off the central bank’s $85 billion in monthly bond purchases until at least September.

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