Plunge in Jobless Claims Reported
The number of Americans lodging new unemployment claims plunged unexpectedly last week to the lowest level since February, bolstering hopes that the economy may have finally shed the cobwebs of the 2001 recession.
The Labor Department said Thursday that new claims dropped 29,000 to 386,000 in the week ended Saturday -- far beneath Wall Street expectations for 413,000 applications -- from a revised 415,000 the week before.
New claims were at their lowest level since the week of Feb. 8, and the first time since then that they fell below the 400,000 mark viewed by economists as the sign of a soft jobs market. Claims had been above 400,000 for 22 straight weeks.
“While breaking the 400,000 mark is a pleasant surprise, the sharp drop in jobless claims just hints that less workers are losing their jobs,” said Oscar Gonzalez, an economist at John Hancock Financial Services Inc. “However, less firing is not the same as more hiring, so we’re still not looking at a substantial improvement in the labor market.”
A Labor spokesman said it is not uncommon for the data to be volatile in July “because of traditional temporary layoffs in industries such as automobiles, textiles and apparel.”
Analysts said the report was a sign the labor market may be rebounding from its post-recession depths, which pushed the unemployment rate to a nine-year high of 6.4% in June.
The fall in initial claims brought the average weekly rate of claims over the last four weeks to 419,250, down from the 424,750 average in the previous week. Some economists consider the four-week average a better indicator because it smooths out the weekly volatility.
