WASHINGTON (Reuters) — The number of Americans filing new claims for unemployment benefits dropped to its lowest level in nearly 5.5 years last week, signaling labour market resilience in the face of fiscal austerity.
Initial claims for state unemployment benefits fell 4,000 to a seasonally adjusted 323,000, the lowest level since January 2008, the U.S. Labor Department said on May 9.
Claims for the prior week were revised to show 3,000 more applications received than previously reported. Economists polled by Reuters had expected first-time applications to rise to 335,000 last week.
U.S. stock index futures pared losses on the report, while Treasury debt prices trimmed gains. The dollar trimmed losses against the yen.
The third straight weekly decline in claims pushed them further below the 350,000 mark, which economists normally associate with a firming labour market.
Claims are showing no sign of a pick-up in layoffs even as other parts of the economy such as manufacturing start to show strain from tighter fiscal policy.
"It's nice to see improvement in claims. We are not worried about the separation side of the equation. We continue to be worried about the hiring side," said Jacob Oubina, senior economist at RBC Capital Markets in New York.
A Labor Department analyst said no states had been estimated and there was nothing unusual in the state-level data.
The four-week moving average for new claims, a better gauge of job market trends, dropped 6,250 to 336,750 — the lowest level since November 2007.
Coming on the heels of data last week showing surprising strength in the labour market, the claims report could further assuage fears of an abrupt slowdown in the economy.
Employers added 165,000 new jobs to their payrolls in April and hiring in the previous two months was stronger than initially reported. The unemployment rate dropped to a four-year low of 7.5 per cent.
The improvement in employment contrasts sharply with other data, including retail sales and manufacturing, that have suggested a cooling in the economy at the end of the first quarter, which persisted early in the April-June period.
The slowdown in activity after the economy expanded at a 2.5 per cent annual pace in the first three months of the year has been blamed on higher taxes which went into effect on Jan. 1 and $85 billion in government budget cuts known as the "sequester."
The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid dropped 27,000 to 3.0 million in the week ended April 27. That was the lowest level since May 2008.
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