US jobless claims fall sharply to five-year low

WASHINGTON - Reuters

The number of jobless in the US has fallen to its lowest level in the last five years. AA photo

The number of Americans filing new jobless benefits claims fell sharply last week to its lowest level since the early days of the 2007-09 recession, a sign the job market is still healing even though the economy remains weak.

Other data on May 2 showed a narrowing of the U.S. trade gap in March, although drops in imports and exports offered warning signs over the strength of domestic and foreign demand.

Initial claims for state unemployment benefits dropped 18,000 to a seasonally adjusted 324,000 last week, the Labor Department said.

The claims report runs counter to a growing number of signals that economic activity softened in March and April, a phenomena economists have dubbed the spring swoon because it also happened in the previous two years.

“Growth slowed between the first and second quarters, but the claims data suggest that the extent of this slowing was limited,” said Daniel Silver, an economist at JPMorgan in New York.

The data on claims has no direct bearing on the Labor Department’s monthly employment report for April. However, it suggests employers are feeling less pressure to lay workers off, even if they have cut back on hiring.

“Layoffs (are) not an issue. Companies are reluctant to hire. This is keeping the jobs market in a rut,” said Ryan Sweet, an economist with Moody’s Analytics in West Chester, Pennsylvania.

Analysts expect 345,000 new jobless

Analysts had expected 345,000 new jobless claims last week, and the positive signal from the data sent U.S. stock prices higher, while yields on U.S. government debt rose. An interest rate cut from the European Central Bank also lifted investor sentiment.

Supporting the view that hiring picked up modestly, a survey of small businesses showed they added workers in April for the fifth straight month. Planned layoffs also fell.

The recent slowdown in the economy has been blamed on government belt-tightening, although analysts also think a mild winter followed by an unusually cold March may have led some employers and consumers to bring forward hiring and purchases.