July 12, 2012 at 8:46 AM ET
After weeks of disappointing labor market data, job seekers got a sign Thursday that employment hasn't flatlined.
The Labor Department reported that new claims for unemployment insurance dropped to a four-year low in the latest week. So-called jobless claims declined by 26,000 to 350,000, the lowest level since March 2008.
The decline in the weekly number was much larger than economists had expected, suggesting that while employers aren't hiring like gangbusters, they at least aren't doing mass layoffs either.
Still, the jobless claims data had an important caveat.
A Labor Department official noted that part of the drop might be due to some auto manufacturers keeping their plants open during the first week of July to meet demand.
Normally plant closures during that week would lead to a spike in jobless claims, but they did not materialize. That suggests part of the strength in the labor market last week might be due to temporary factors.
The four-week moving average for new claims, a better measure of labor market trends, fell 9,750 to 376,500. That is still a significant drop, although the average is only at its lowest since May.
"It's great, it's welcome news. It's not a game changer. We are still at 350,000, which is the least since March of 2008 but it is not effectively changing anything - the conversation, the approach, the market's outlook - nothing," said Peter Kenny, managing director at Knight Capital.
Reuters contributed to this report.