Initial Claims at 454,000; Continuing Claims Drop

Jobless claims fell more sharply than economists expected last week as new filings for unemployment benefits dropped 21,000 to 454,000, the Labor Department said.

The level of initial claims recorded during the seven-day period ending July 3 is the lowest in over a month. Continuing claims fell 224,000 to 4.413 million, their lowest level since November 2008, according to the report, which was released Thursday.

Diane Swonk, chief economist at Mesirow Financial, cautioned against viewing the declines in a favorable light, noting that they reflect the loss of job seekers who have exhausted benefits and stopped looking for work. Unemployment benefits for more than one million Americans expired July 1 after Congress failed to extend them.

“Look for more second- and third-time applicants to drop out of the pool over the next several weeks,” Mesirow wrote in a research note. “Even the most conservative economists thought that extensions to unemployment insurance should have been phased out — rather than cut abruptly — given the economic fallout such a shift implied for the rest of the economy.”

Economists expected 465,000 initial claims and 4.6 million continuing claims, according to the median estimate from Thomson Reuters. Continuing claims have steadily fallen from about 4.8 million claims a week at the beginning of the year.

The four-week moving average for initial claims, a less volatile figure, fell to 466,000 from 467,250 the week before. The four-week average for continuing claims fell to 4.554 million from 4.573 million.

States had one less day to process claims due to the July 4 holiday.

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