U.S. Jobless Claims Drop Sharply

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The number of Americans filing new claims for jobless benefits (search) fell by an unexpectedly sharp 34,000 last week, the largest drop since 2002, due in part to fewer auto-sector layoffs, a government report showed on Thursday.

First-time claims for state unemployment insurance aid fell to 303,000 in the week ended July 16 from a revised 337,000 the previous week, the Labor Department (search) said.

It was the largest one-week decline since December 2002 and brought new claims to the lowest level since April.

Wall Street (search) had expected a far smaller decrease to 327,000 from the original reading of 336,000 in the week ended July 9.

A Labor Department analyst said there were no special factors behind the large drop, but noted the number of new claims from the automobile sector was smaller than the previous week.

The closely watched four-week moving average, which smooths weekly volatility to provide a better sense of the pace of layoffs, fell to 318,000 from 321,250 in the prior week.

The number of people who remain on the benefit rolls after drawing an initial week of aid fell 41,000 to 2.58 million in the week ended July 9, the latest for which figures were available.