After reporting an unexpected increase in first-time claims for U.S. unemployment benefits in the previous week, the Labor Department released a report on Thursday showing that initial jobless claims pulled back by more than expected in the week ended May 3rd.
The Labor Department said initial jobless claims fell to 319,000, a decrease of 26,000 from the previous week's revised level of 345,000.
Economists had expected jobless claims to drop to 325,000 from the 344,000 originally reported for the previous week.
With the bigger than expected drop, jobless claims partly offset the increases seen in the three previous week, pulling back toward the nearly seven-year low set in the week ended April 5th.
Meanwhile, the Labor Department said the less volatile four-week moving average edged up to 324,750, an increase of 4,500 from the previous week's revised average of 320,250.
Continuing claims, an indicator of the number of people receiving ongoing unemployment assistance, fell to 2.685 million in the week ended April 26th from the previous week's revised level of 2.761 million.
The four-week moving average of continuing claims also fell to 2,715,250, a decrease of 16,250 from the previous week's revised average of 2,731,500.
With the decrease, the four-week moving average of continuing claims fell to its lowest level since December of 2007.
Peter Boockvar, managing director at the Lindsey Group, said, "Bottom line, the lower than expected print in claims confirms the low 300,000 claims trend we've been seeing since the excessive snow stopped falling, with claims hovering around the lowest since 2007."
"The labor market continues its upward pace but the question remains as to whether we're on the cusp of a new acceleration or are just back to the pre-winter trend," he added.
Last Friday, the Labor Department released a separate report showing stronger than expected job growth and a steep drop in the unemployment rate.
The Labor Department said non-farm payroll employment surged up by 288,000 jobs in April compared to economist estimates for an increase of about 218,000 jobs.
With the stronger than expected job growth, the unemployment rate dropped to 6.3 percent in April from 6.7 percent in March. Economists had expected the unemployment rate to edge down to 6.6 percent.
The drop pulled the unemployment rate down to its lowest level since September of 2008, although the decrease partly reflected a notably smaller labor force.
"If the unemployment rate continues its downward trend in coming months, irrespective of the reason, wage increases may be inevitable which provides a new quandary for the Fed's fed funds rate policy of doing nothing for at least a year," Boockvar said.
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