The Associated Press
Thursday, May 6, 2010; 9:26 AM
WASHINGTON — First-time claims for unemployment benefits dropped for the third consecutive week, a sign the job market is slowly recovering.
The Labor Department said Thursday that initial claims for unemployment insurance fell by 7,000 to a seasonally adjusted 444,000. That’s above economists’ forecasts of 440,000, according to Thomson Reuters.
Layoffs have dropped back to pre-recession levels and employers have slowly resumed hiring as the economy recovers from the worst recession since the 1930s.
That has brought claims down from a peak of 651,000 in March 2009. But many economists are concerned that claims haven’t fallen faster this year. Instead, they have fluctuated around 450,000.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the report may indicate that while large firms are hiring, small companies are still cutting jobs.
“Claims only capture the latter effect,” he said in a note to clients.
The four-week average of claims, which smooths fluctuations, declined 4,750 to 458,500, its first decrease in five weeks.
Several recent economic indicators show that the recovery is gaining strength. But so far the economy hasn’t grown fast enough to bring down the unemployment rate.
When the government releases the April jobs report on Friday, analysts forecast that it will show the unemployment rate was stuck at 9.7 percent for the fourth straight month. Employers are expected to add 200,000 jobs, though as many as half those new jobs may be temporary Census workers carrying out the 2010 Census, economists say.
One factor keeping the unemployment rate high is that thousands of people have re-entered the labor force after giving up on job hunts during the recession. When jobless people don’t look for work, they aren’t counted in the official unemployment rate.
Another factor is high productivity growth. In a separate report, the Labor Department said productivity grew by 3.6 percent in the first three months of this year, much more than forecast.