WASHINGTON – New applications for U.S. jobless benefits (search) fell more sharply than expected last week, but a rise in the longer-term unemployed marred the improving jobs picture.
The Labor Department (search) said on Thursday that 399,000 people filed for state unemployment insurance payments in the week to Sept. 13, down 29,000 from a revised 428,000 the week before.
The drop in initial claims (search) was the largest one-week decline since a 31,000 decrease in the week ended April 5, and brought claims well below Wall Street forecasts for 410,000. The previous week's figure was revised from 422,000.
U.S. treasuries shed early gains on the surprising drop in claims.
"It's definitely one week's worth of good numbers, but the trend is still as discouraging as ever," said Lara Rhame, a senior economist at Brown Brothers Harriman.
"The four-week moving average is higher and continuing claims made another increase," Rhame said. "The headline was positive, but I don't think this one number is enough to indicate that the broader employment picture has improved."
The widely watched four-week moving average of jobless claims rose to 410,750 in the Sept. 13 week from 408,750 the previous week. The moving average, regarded by economists as a truer reflection of the market than the more volatile weekly figure, has been rising since late August.
The number of people continuing to draw benefits rose to 3.68 million in the Sept. 6 week, the latest week for which figures are available. This was its highest since late June and a sign that people are still struggling to find work.
The weak job market was cited by the U.S. Federal Reserve in its decision to hold rates at 45-year lows on Tuesday.
"The labor market is still a lagging indicator," said Patrick Fearon, an economist for A.G. Edwards and Sons. "That would be consistent with the apparent Fed disposition to keep interest rates very low for a considerable period."
New claims have been stuck in the 30,000 range since mid-July, adding to a picture of a sluggish economy that is having trouble supporting new jobs.