Initial jobless claims dropped 8.3% to 300,000 for the week ending May 24, according to a Labor Department report released today, putting them back near a seven-year low. After the previous week's unexpectedly large 9.7% rise, the latest numbers seem to indicate the labor market is back on track for steady improvement.
Analysts had been expecting another downturn following the sharp rise, but their 317,000 estimate proved too conservative.
From a more long-term perspective, a strong 3.5% drop in the four-week moving average to 311,500 initial claims marks a new post-recession low. 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, Wisconsin, New York, and Minnesota all recorded decreases of more than 1,000 initial claims for the week ending May 17 (most recent available data). While Wisconsin and Minnesota did not provide the Labor Department with a comment, New York cited fewer construction layoffs as the main reason for its jobless claims decline.
For the same period, five states registered increases of more than 1,000 initial claims. Michigan topped the list, pointing to wholesale trade layoffs as the primary reason for its 5,810-initial-jobless-claim rise.