While the Labor Department released a report on Thursday showing that first-time claims for U.S. unemployment benefits unexpectedly dropped to a seven-year low in the week ended September 7th, the decrease was largely due to technical issues in two states.
The Labor Department said initial jobless claims dropped to 292,000, a decrease of 31,000 from the previous week's unrevised figure of 323,000.
The notable decrease came as a surprise to economists, who had been expecting jobless claims to climb to 330,000.
With the unexpected decrease, jobless claims fell below 300,000 for the first time since May of 2007 and hit their lowest level since coming in at 291,000 in the week ended April 1, 2006.
However, the Labor Department noted that the decrease in jobless claims came as two states failed to report all of their claims while upgrading their computer systems.
"The Labor Day holiday may also [have] had an impact," said Peter Boockvar, chief market analyst at the Lindsey Group. "Therefore, ignore the headline number."
The report showed that the less volatile four-week moving average fell to 321,250, a decrease of 7,500 from the previous week's revised average of 328,750.
The decrease extended a recent downward trend by the four-week moving average, which once again fell to its lowest level since October of 2007.
Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also fell to 2.871 million in the week ended August 31st from the preceding week's revised level of 2.944 million.
The four-week moving average of continuing claims dropped to 2,953,000, a decrease of 24,750 from the preceding week's revised average of 2,977,750.
Last Friday, the Labor Department released a separate report showing that U.S. employment rose by less than expected in the month of August.
The Labor Department said non-farm payroll employment increased by 169,000 jobs in August compared to economist estimates for an increase of about 180,000 jobs.
The report also showed a notable downward revision to the pace of job growth in July, with the revised data showing an addition of 104,000 jobs compared to the previously reported increase of 162,000 jobs.
Despite the weaker than expected job growth, the unemployment rate dipped to 7.3 percent in August from 7.4 percent in July. Economists had expected the unemployment to come in unchanged.
With the unexpected decrease, the unemployment rate fell to its lowest level since a matching 7.3 percent in December of 2008.
However, the drop in the unemployment rate was largely due to a decrease in the size of the labor force, with the participation rate falling to its lowest level since 1978.
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