Initial jobless claims dropped 7.5% for the week ending May 10 to their lowest level in seven years, according to a Labor Department report released today. Weekly unemployment benefit applications dropped 24,000 to 297,000.
After falling a revised 7% the previous week to 321,000 initial claims, this newest report came as a surprise to analysts, who had expected initial claims to clock in at 317,000. The latest report also shows that fewer people are receiving benefits each week. The number of recipients fell to 2.67 million, the fewest since Dec. 1, 2007, when the recession began.
From a more long-term perspective, a 0.6% dip in the four-week moving average to 323,250 initial claims came as a welcome respite after three previous reports of rising numbers. Both the latest week's claims and the four-week average fall significantly below 400,000, a cutoff point that economists consider a sign of an improving labor market.
On a state-by-state basis, seven states recorded a decrease of more than 1,000 initial claims for the week ending May 3 (most recent available data). New York recorded the biggest drop by far, citing fewer layoffs in transportation and warehousing, food services, and education as main reasons for its 20,640-claim decline.
For the same period, only Pennsylvania and Texas registered increases of more than 1,000 initial claims. Construction layoffs contributed to Pennsylvania's 1,400-initial-claims increase, while Texas pointed to manufacturing as one of the industries behind its 1,150-initial-claim boost.
The unemployment rate fell to 6.3% last month, from 6.7%. But the drop occurred because fewer people looked for work. The government doesn't count people as unemployed unless they are actively searching.
-- Material from The Associated Press was used in this report.