WASHINGTON – The number of Americans filing new claims for unemployment benefits (search) last week fell to the lowest level in six months, another indication that the battered U.S. economy may be recovering from an extended period of weakness.
The Labor Department (search) reported Thursday that 386,000 newly laid-off workers filed claims for jobless benefits last week, down by 17,000 from the previous week.
It was the smallest number of laid off workers filing for claims since the week ending Feb. 8, when the total was 378,000 and represented the fourth week out of the past five in which claims were below 400,000. Economists see weekly claims numbers below 400,000 as signaling an improving job market.
Labor Department analysts said that last week's massive power blackout had only a minimal impact on the claims figures. While one state reported that its claims would probably have been 2,000 to 3,000 higher if its offices had been open for the whole week, the bulk of the improvement in the claims figures came from outside the areas affected by the blackouts.
The unemployment rate (search) hit a nine-year high of 6.4 percent in June but then edged down to 6.2 percent in July. However, the bulk of that improvement reflected the fact that 500,000 discouraged workers gave up looking for a job and left the labor market. Businesses continued trimming their payrolls in July with job losses since January totaling 486,000.
But economists are predicting that economic growth in the current July-September quarter and the final three months of this year could exceed 4 percent at an annual rate, more than double the pace of the last nine months.
If that forecast comes true, then the labor market should begin improving on a sustained, but gradual basis. Many analysts believe the unemployment rate will still be around 5.7 percent when voters go to the polls in November 2004 to elect the next president.
The four-week moving average for jobless claims, which helps smooth out weekly fluctuations, also showed an improvement last week, dipping to 394,250, down from 395,500 the previous week. It was the lowest point for the four-week moving average since Feb. 15.
The number of people drawing jobless benefits for more than one week rose by 41,000 last week to 3.67 million, the highest level since the end of June.