Labor: Unemployment Claims Drop
New requests for unemployment benefits fell sharply last week, the first decline in a month and a hopeful sign after a raft of negative economic reports. New claims for jobless aid dropped by 31,000 to a seasonally adjusted 473,000, the Labor Department said Thursday. Still, claims remain much higher than they would be in a healthy economy. Employers are reluctant to hire as economic growth appears to be slowing.
The drop comes after a steep rise the previous three weeks that sent claims to their highest level in nine months. Those increases raised fears that businesses were starting to layoff more workers. The report is “mildly encouraging” but should be treated with caution, said Doug Porter, an economist at BMO Capital Markets, because the weekly claims report is highly volatile.
Even with last week’s decline, the four-week average, a less volatile measure, rose to 486,750, the most since November 2009.
Wall Street economists had expected a smaller drop, according to surveys by Thomson Reuters. Stock futures rose immediately after the report’s release. The department also said the total unemployment benefit rolls climbing steeply, as more people join extended unemployment aid programs that were renewed last month by Congress.
During the recession, Congress added up to 73 weeks of emergency aid on top of the 26 weeks typically provided by the states.
All told, about 10.1 million people were receiving unemployment checks in the week ended Aug. 7, the latest data available. That’s up about 260,000 from the previous week.
The extended program lapsed in June, throwing nearly 2 million people off the rolls. But since Congress renewed the program, the total benefit rolls have increased by 2.2 million.