The number of U.S. workers filing new claims for jobless benefits fell unexpectedly last week to the lowest level since mid-April, a government report said Thursday, raising optimism that the sluggish economy may skirt a recession.
Initial claims for state unemployment insurance benefits fell to 357,000 in the week ended May 31 from an upwardly revised 375,000 for the prior week, the Labor Department said.
The drop was the largest in six weeks and the number of new claims was below the most optimistic forecast.
Analysts polled by Reuters were expecting 375,000 in new claims, up from the originally reported 372,000 in the prior week.
“They support our belief that the economy is much better than many give it credit for,” said Kim Rupert, managing director, global fixed-income analysis with Action Economics LLC in San Francisco.
“Claims are elevated relative to where the were last year ... but they still aren’t recessionary. It indicates that the economy has slowed but really hasn’t broken.”
U.S. stock futures rose following the report and the dollar strengthened. Bond prices fell.
The four-week average of new jobless claims, which is considered a more accurate measure of employment trends since it evens out weekly volatility, dipped to 368,500 in the week ended May 31 from an upwardly revised 371,250 in the previous week.
The number of people remaining on the benefits rolls after drawing an initial week of aid fell 16,000 from a four-year high to 3.093 million in the week ended May 24, the latest period for which figures were available.
Despite the decline, the number of so-called continued claims remained above 3 million for the sixth straight week in a sign that unemployed workers are having a tough time finding a new job.
This week’s string of employment indicators will culminate in the government’s May payrolls report on Friday.
The reports so far pointed to a labor market that was weak but stabilizing. Manufacturing and service sector employment both contracted slightly in May, according to the Institute for Supply Management, although a separate report from ADP showed private sector payrolls expanded last month.
Announced layoffs rose to a 2-1/2 year high in May, according to employment consultancy Challenger, Gray & Christmas Inc.