First-time filings for state unemployment benefits fell by 10,000 to a seasonally adjusted 570,000 last week, marking the first drop in initial claims in three weeks.
Both initial claims and continuing claims ticked down in the latest readings, the Labor Department reported Thursday.
Economists surveyed by MarketWatch were expecting initial claims to drop back to 565,000. A year ago, initial claims were at 433,000.
Claims had risen by 26,000 over the past two weeks.
Although claims have fallen below the 600,000 level that prevailed earlier this year, economists are disappointed with the pace of improvement in the data.
Many analysts, including top Federal Reserve officials, are worried the recovery will be “jobless” as businesses hold off hiring until the economic expansion is assured.
“It seems that since falling below the 600,000 mark in early July, when the data were volatile due to auto-related distortions, the underlying pace of layoffs has settled around 560,000 to 570,000. The good news is that this confirms the slowdown in layoffs, but the bad news is that the pace of layoffs is still extremely high,” said Omair Sharif, economist at Royal Bank of Scotland.
The four-week average of initial claims fell by 4,750 to 566,250.
Meanwhile, the number of people collecting regular state unemployment benefits fell by 119,000 to a seasonally adjusted 6.13 million in the week ended Aug. 15. This is the lowest level since early April.
There is some sense among economists that this decline reflects people exhausting their benefits and falling off the rolls.
“We know that the exhaustions rate for benefits is at an all-time high of about 51 percent, so rather than reflecting fundamental improvement in labor demand, part of the decline in continuing claims simply reflects people collecting all 26 weeks of unemployment checks and falling off of the regular rolls,” Sharif said.
The four-week average of continuing claims fell by 27,000 to 6.24 million.
The insured unemployment rate dropped to 4.6 percent from 4.7 percent.
Initial claims represent job destruction, while the level of continuing claims indicates how hard or easy it is for displaced workers to find new jobs.
Benefits are generally available for those who lose their full-time job through no fault of their own. Those who exhaust their benefits are still counted as unemployed if they are actively looking for work.
In a separate report, the government said that second quarter gross domestic product fell 1 percent, unrevised from prior estimates.
(c) 2009, MarketWatch.com Inc. Source: McClatchy-Tribune Information Services.