Initial jobless claims dropped 3.5% to 304,000 for the week ending July 5, according to a Labor Department report released today, nearly a seven-year low.
After increasing a revised 0.6% the previous week, this newest report fell well below analysts' expectations of 315,000 initial claims, the same as the week before.
From a more long-term perspective, a 1.1% decline in the four-week moving average to 311,500 initial claims marks the first dip in three reports. For investors, this serves as a welcome reassurance that an upward trend seems avoidable, and a downward trend attainable. 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, five states recorded decreases of more than 1,000 initial claims for the week ending June 28 (most recent available data). California enjoyed the largest drop (-7,290), due primarily to fewer services sector layoffs.
For the same period, three states registered increases of more than 1,000 initial claims. Educational services layoffs in New Jersey and Massachusetts were the primary contributors to the states' 8,580-claim and 4,570-claim boosts, respectively. Connecticut did not provide a comment to the Labor Department for its 1,410-initial-claim increase.
The latest overall number is not far from a reading of 298,000 two months ago, which was the lowest since 2007, before the Great Recession began. Still, some economists warned that the figures could be volatile in the weeks ahead because auto manufacturers typically close their plants in July to prepare for new models to be released in the fall. That can cause spikes in temporary layoffs.
The number of people receiving benefits ticked up 10,000 to 2.58 million. That's down from about 4.5 million a year ago. Much of that decline has occurred because an extended benefits program expired at the end of last year.
-- Material from The Associated Press was used in this report.