WASHINGTON The number of Americans filing new claims for unemployment benefits fell last week by a surprisingly large 16,000, a sign there is still gas in the tank for the labor market's recovery despite signs of slower growth.
Initial claims for state unemployment benefits dropped to a seasonally adjusted 339,000, the Labor Department said on Thursday.
"The trend suggests a very slow improvement in the labor market," said Gary Thayer, a macro strategist at Wells Fargo Advisors in St. Louis.
The report runs counter to several weeks of signals that economic activity softened in March and early April, a phenomenon economists have dubbed the spring swoon because it also happened in the previous two years.
The four-week moving average for new claims, a less volatile measure of labor market trends, fell 4,500 to 357,500.
The data eased concerns of a deterioration in labor market conditions after nonfarm payrolls posted their smallest increase in nine months in March.
"The downtrend in unemployment remains on track," said Jim O'Sullivan, an economist at High frequency Economics in Valhalla, New York.
Still, claims have been difficult to adjust for seasonal swings in recent weeks because of the Easter holiday and spring breaks that are staggered across the nation's schools, so analysts were cautious about too firm a conclusion about what the data might signal.
"Claims are a poor guide to payrolls right now," said Ian Shepherdson, an economist at Pantheon Macroeconomic Advisors in White Plains, New York.
Labor Department analysts said there was nothing unusual in the data and no states had estimated their claims, but the data were still affected by holidays in some regions.
STILL SOME BRIGHT SPOTS
The report helped propel U.S. stock prices higher. Yields on U.S. government debt also rose, with investors preparing for an upcoming $29 billion auction of seven-year notes. The dollar weakened against the euro and the yen, with traders citing a recent slew of soft economic data that has raised concerns about the pace of the U.S. economic recovery.
While data for January and February suggested that growth accelerated in the first quarter, the economy appeared to have hit a speed bump at the end of the quarter. Data ranging from employment to retail sales and manufacturing weakened significantly in March, and factories appear to have continued to sputter in April.
Even the housing market, until recently a bright spot in the economy, has shown signs of slowing. Mortgage rates, however, have come close to record lows, leading to a spurt in mortgage applications in recent weeks. In the week through Thursday, the average interest rate on 30-year fixed rate mortgages hit 3.4 percent, the lowest since January and near the lowest on record, mortgage finance firm Freddie Mac said.
Analysts had expected 351,000 new jobless claims last week. The prior week's number was revised to show 3,000 more applications than previously reported.
Economists expect the government next week will report that employers hired 145,000 people in April. Employers added only 88,000 workers to their payrolls last month after a solid 268,000 increase in February.
The slowdown 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.
It was unclear whether there was any impact in the claims data from a brief shutdown of offices in Boston area last week as police hunted for a man suspected of helping plant bombs at the Boston Marathon. State authorities asked hundreds of thousands of Boston-area workers to stay in their homes on April 19.
(Additional reporting by Ellen Freilich in New York; Editing by Tim Ahmann and Neil Stempleman)