First-time unemployment claims lowest since July 2008

New applications for unemployment insurance benefits fell below the 400,000 level last week, according to government data released Thursday, a sign of a strengthening employment environment.

Initial claims for these benefits fell 36,000 to a seasonally adjusted 383,000 in the week ended Feb. 5, hitting the lowest seen since July 2008, the Labor Department reported.

Economists looking at the health of the job market say that claims would have to remain below the 400,000 level before there’s a substantial gain in hiring. The last time claims were below that was in late December.

“The bottom line is that this report is consistent with the idea that the labor market is in recovery mode,” wrote analysts at Bank of America Merrill Lynch in a research note.

The report on jobless claims represents “clear evidence that the underlying downward trend in claims remains in place,” wrote Ian Shepherdson, chief U.S. economist with High Frequency Economics, in a research note.

“It is just not possible for claims to fall this far and not see some beneficial effect in payrolls,” Shepherdson wrote.

Economists polled by MarketWatch had expected 410,000 claims to be filed for the latest week.

In recent weeks, weather has been responsible for some volatility in the data. The four-week average of new claims, which some economists see as a more reliable indicator, fell 16,000 to a total of 415,500.

About 9.4 million Americans were getting some kind of state or federal unemployment benefit in the week ended Jan. 22, up about 106,000 from the week before that.

Mantell writes for MarketWatch.com/McClatchy.