WASHINGTON – The number of U.S. workers applying for first-time state jobless benefits declined last week, in line with expectations and revealing a still weak but improving labor market as the economy inches out of recession, a government report on Thursday showed.
Initial jobless claims fell by 31,000 to a seasonally adjusted 421,000 for the week ended April 20, the Labor Department reported. Wall Street economists in a Reuters poll were expecting claims to fall to 425,000.
The four-week moving average, considered a more reliable gauge of employment conditions because it irons out weekly fluctuations, rose for the eighth week in a row, hitting 452,500. That was the highest level reached since November of last year when the economy was hemorrhaging jobs after the Sept. 11 attacks.
Even though claims fell in the most recently reported week, the level for the past several weeks has remained well above the key 400,000 level economists consider recessionary.
The Labor Department attributes this to a pickup in applications for extended benefits from jobless workers who have exhausted their unemployment aid. However, these extended benefits applications have begun to taper off, the department said.
But the decline in last week's claims was taken as good news by economists, who say the labor market is showing signs of improvement.
"This is what we we're looking for -- a drop down to the 425,000 level. It'll probably fall back down to the 400,000 level in the next two weeks or so," said Drew Matus, economist with Lehman Brothers in New York.
The U.S. Treasury bond market showed little reaction to the latest economic data -- choosing to focus instead on grim prospects for the stock market amid a slew of corporate earnings results. The dollar fell slightly against the euro and the yen.
In a sign of better days ahead for the U.S. labor market, the number of workers continuing on jobless benefits declined by 93,000 to a seasonally adjusted 3.7 million for the week ended April 13, the department said.
The still-weak labor market will likely be a chief concern of the Federal Reserve when policy-makers there meet next month to set interest rates.
Most economists believe the Fed, at its next policy-setting meeting on May 7, will hold off on raising rates, taking into account a string of data that has shown a weaker recovery than expected.
Next week's monthly employment report, to be released by the Labor Department on May 3, will likely shed more light on the nation's labor market picture. Economists in a Reuters poll are expecting the monthly report will show that the economy added 65,000 jobs in March, with the unemployment rate remaining at 5.7 percent.