New Jobless Claims Drop Sharply

The number of Americans filing first-time claims for jobless benefits took an unexpectedly sharp plunge last week, reaching a level not seen since before the economy tumbled into recession in 2001, a government report showed on Thursday.

Initial claims for state unemployment aid fell 43,000 to 348,000 in the week ending Nov. 1 from a revised 391,000 in the prior week, the Labor Department (search) said. It was the lowest claims level since late January 2001, two months before the recession began.

Wall Street economists had expected claims to slip to 380,000 from a strike-elevated 386,000 initially reported for the week ending Oct. 25.

A spokesman for the department said he could not point to any special factors to account for the big drop in claims last week, but said problems with seasonally adjusting the data could be a factor.

"Every week we encourage [looking at] the four-week average. This is certainly one of those weeks," he said.

The four-week average (search), which smooths weekly volatility to present a better picture of labor-market trends, fell 10,000 to 380,000 last week, its lowest level since March 2001, the month the economy tumbled into recession.

Initial claims and the four-week average have been below the 400,000 level for five weeks. Economists see that level as a divide between an improving and a deteriorating labor market, and the report suggested a long period of job losses may have finally run its course.

On Friday, the department releases its employment report for October. Financial market economists are looking for U.S. payrolls to rise 55,000 after a 57,000 gain in September. They expect the jobless rate to hold steady at 6.1 percent.