WASHINGTON — New claims for unemployment benefits fell more than expected last week as layoffs ease and hiring slowly recovers.
The decline brought the four-week average of claims, which smooths volatility, to its lowest level since September 2008, when the financial crisis intensified. The report is an encouraging sign that the economy is getting closer to generating job gains, economists said.
“We’re on the cusp of a hiring recovery,” said Zach Pandl, an economist at Nomura Securities.
The Labor Department said Thursday that first-time claims for jobless benefits dropped by 14,000 to a seasonally adjusted 442,000. That’s below analysts’ estimates of 450,000, according to Thomson Reuters.
Most of the drop resulted from a change in the calculations the department makes to seasonally adjust the data, a Labor Department analyst said.
The department updates its seasonal adjustment methods every year, and revises its data for the previous five years. Seasonal adjustment attempts to filter out expected changes in employment such as the layoff of temporary retail employees after the winter holidays. The goal of seasonally adjusted figures is to provide a more accurate picture of underlying economic trends.
Excluding seasonal adjustment, initial claims fell by more than 30,000 last week to 405,557.
The report contributed to a rise in the stock market. The Dow Jones industrial average increased 105 points in morning trading. Broader indexes also gained.
Initial claims have fallen in three of the past four weeks, wiping out most of the increase that took place in the first two months of this year.
First-time claims were elevated last month by severe snowstorms on the East Coast, which caused backlogs in many state offices that fell behind in processing claims.
Many economists say claims need to fall below roughly 425,000 to signal that the economy will consistently create jobs, though some say it could happen with claims at higher levels.
Carl Riccadonna, senior U.S. economist at Deutsche Bank, said claims need to fall below 400,000 before the economy will consistently create jobs. Claims will likely fall below that level sometime in April, Riccadonna wrote in a note to clients.
Analysts forecast the nation will gain more than 150,000 jobs in March, partly due to temporary hiring for the Census. The Labor Department will report the March figures April 2.
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