WASHINGTON – New claims for state unemployment insurance fell last week, the third sharp drop in a row, suggesting that the rash of layoffs seen so far this year may be moderating.
On Wall Street, stocks moved higher. The Dow Jones industrial average gained 128 points in the first half-hour of trading Thursday and the Nasdaq index added 48 points.
The Labor Department reported Thursday that the number of Americans filing new applications for jobless benefits for the workweek ending June 23 declined by a seasonally adjusted 16,000 to 388,000, the lowest point since early May.
The week before, new claims plunged by 31,000 to 404,000.
The more stable four-week moving average of jobless claims, which smoothes out week-to-week fluctuations, also fell last week to 416,000, the lowest level since the beginning of the month.
The encouraging news for workers comes one day after the Federal Reserve cut interest rates for the sixth time this year to boost the sagging economy. The latest reduction was a conservative one-quarter percentage point; the other five were one-half point each.
The jobless claims report also comes during a week that has generated other good economic news, offering hope that the economy, which has been mired in a slowdown for a year, may be showing some signs of improving.
On Tuesday three reports showed that consumer confidence in June rose to its highest level of the year; demand for big-ticket items jumped in May; and new-home sales rose solidly.
Still, the economic slowdown has been hard on companies. To cope, they have sharply cut production and laid off workers. In May, the unemployment rate edged down to 4.4 percent, but businesses eliminated 19,000 jobs. Nortel and International Paper are among companies that have recently announced layoffs.
Thursday's report also showed that for the workweek ending June 16, 42 states and territories reported a decrease in claims and 11 reported increases. The information lags a week behind the national figures and is not seasonally adjusted.
North Carolina reported the biggest drop in claims, down by 12,427 because of fewer layoffs in the food, electronics, trade, textile, apparel and furniture industries. Illinois saw claims go down by 3,175 due to fewer layoffs in the construction, service and manufacturing businesses.
Tennessee had a 2,675 decline in claims because of fewer layoffs in a variety of industries including transportation, textile, apparel and lumber.
California reported the biggest jump in new claims, up by 1,262 because of layoffs in the electronics and agriculture industries.