Jobless claims drop to lowest monthly level in 7 years

 

A monthly average of unemployment benefits fell to nearly a seven-year low, a sign the labor market’s recovery is improving.

The four-week average, a better gauge as to the direction of the labor market, fell to 310,250, the lowest average since June 2007, when it was 307,500, six months before the recession started, the Labor Department said Thursday.

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Weekly applications for unemployment benefits increased by 8,000 to a seasonally adjusted 312,000 for the week ending May 31, after a slight revision upward the previous week.

The previous week's level was revised up by 4,000 to 304,000, as businesses lay off fewer workers.

May’s jobs report comes out on Friday and is expected to show that 210,000 jobs were created last month, slower than April but at a faster pace than last year.

Employers added 288,000 jobs in April as the unemployment rate dropped to 6.3 percent from 6.7 percent, but mostly because more people stopped looking for work.  

Still, Mark Zandi, chief economist at Moody’s Analytics, said this week that there is still plenty of slack in the labor market that could, at this pace of jobs growth, take several years to shake out.

He expects the jobless rate should drop to about 5.5 percent by the end of 2015, but he expects there will still be people out of the workforce or working part-time who want full-time jobs.

Overall, the total numbers of workers receiving benefits dropped to 2.6 million, the lowest level since October 2007.

The economy has shown signs of much stronger growth in April and May following a 1 percent annual rate contraction in the first three months of year mostly because of harsh winter weather.