Initial jobless claims drop unexpectedly

The tally of newly laid-off people requesting jobless benefits fell last week, the government said Thursday, a sign that companies are cutting fewer workers.

But the number of people continuing to receive unemployment benefits rose to 6.78 million -- the largest total on records dating from 1967 and the 17th straight record week. The figures for continuing claims lag behind initial claims by one week.

The Labor Department said the number of initial claims for unemployment insurance dropped to a seasonally adjusted 623,000, from a revised figure of 636,000 in the previous week. It was below analysts’ estimates of 635,000.

In a separate report, the government said demand for big-ticket manufactured goods in April increased for the second time in three months, which may be signaling that the deep recession in manufacturing is bottoming out.

Auto-related layoffs elevated the jobless claims numbers in recent weeks, but a Labor Department analyst said no states said their claims figures were affected by job cuts in that sector last week.

The four-week average of initial jobless claims, which smooths out fluctuations, dropped slightly to 626,750. That figure is about 30,000 below the peak for the recession reached in early April. Some economists say the drop is a sign the recession is bottoming out.

Still, claims remain far above levels in a healthier economy. Weekly initial claims were 378,000 a year ago.