July 5, 2012 at 8:56 AM ET
The U.S. labor market got some upbeat news Thursday, a day ahead of a crucial monthly jobs report from the government that is likely to be one of the last chances President Barack Obama has to prove the economy is improving before the November election.
New claims for unemployment benefits dropped to the lowest level in six weeks, a Labor Department report showed, in a sign that layoffs may be easing.
The report said that initial claims for unemployment insurance tumbled by 14,000 to a seasonally adjusted 374,000. The four-week moving average, considered a more accurate gauge of job market trends, shed 1,500 to 385,750.
The initial claims number was the biggest drop since April. Economists polled by Reuters had forecast claims falling to 385,000 last week
Meanwhile, U.S. private employers added 176,000 jobs in June, topping economists' expectations, a report by a payrolls processor showed.
Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 105,000 jobs. May's figures were revised up slightly to an increase of 136,000 jobs from the previously reported 133,000.
The report is jointly developed with Macroeconomic Advisers LLC. It only covers hiring in the private sector and excludes government job growth. The Labor Department will offer a more complete picture of June hiring on Friday.
The ADP survey offered some hope that hiring is picking up. But it has often deviated sharply from the government report. In May, the Labor Department said employers added just 69,000 jobs, the fewest in a year and nearly half ADP's estimate.
"Jobless claims are a move in the right direction. The drop, combined with the ADP report earlier, suggests the jobs market is not as weak as recent data has suggested. The ADP does suggest there is a risk for a upside surprise in tomorrow's payrolls report, which is good for the dollar," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.
The initial claims data has no bearing on Friday's jobs data, but it does offer a bright spot in what has been a slew of gloomy economic data recently, including signs that the manufacturing sector, which has been a growth engine for the recovery, has slowed.
The Labor Department's monthly report on the nation's employment situation in June is expected to show a slight improvement from May's dismal report. Economists are expecting jobs growth of around 125,000 and an unchanged 8.2 percent unemployment rate, after rising in May for the first time since August.
Job growth has weakened in recent months amid a cloud of uncertainty, spawned by the European debt crisis and fears of tax increases at home next year.
The struggling labor market prompted the Federal Reserve last month to ease monetary policy further by extending a program to re-weight bonds it already holds toward longer maturities to hold down borrowing costs.
New applications for unemployment benefits remain in a tight range, and the four-week average is still elevated, suggesting any improvement in the jobs market will only be gradual.
The economy likely will be the top focus for voters in November who will have to choose between Obama, who has argued the economy is improving although it still has a long way to go, and his Republican challenger Mitt Romney. Romney has argued that Obama's policies have failed to create jobs and that he, as a former businessman, is a better choice to lead the economy to faster growth.
Opinions about the state of the economy often get formed long before people take to the polls, so time is running short for Obama to make his case.
Reuters and The Associated Press contributed to this report.