New unemployment claims drop unexpectedly

New jobless claims decreased by 21,000 last week, hitting their lowest level since early May and falling more than analysts expected.

Claims fell to a seasonally adjusted 454,000 for the week ending July 3, from the previous week's revised figure of 475,000, while forecasters expected a smaller drop, according to Labor Department figures released Thursday. 

The four-week moving average, which smoothes out the volatility of the weekly number and provides a better gauge of the employment situation, was 466,000, a decrease of 1,250 from the previous week's revised average of 467,250.

The numbers of Americans continuing to claim benefits took a big drop down by 224,000 to 4.4 million from the week ending June 26. 

Congress failed to pass an extension of unemployment benefits before leaving for the July 4 break, meaning more than 3.2 million people could lose benefits by the end of the month. 

About 2 million will have lost access to benefits beyond 26 weeks before lawmakers return from recess next week.