Number of new jobless claims down by 20,000

WASHINGTON -- The number of new people signing up for jobless benefits dropped sharply last week, offering an encouraging sign for the health of the labor market.

The Labor Department reported Thursday that new applications filed for unemployment insurance declined by a seasonally adjusted 20,000 to 321,000 for the week ending May 14. The decline, larger than expected, pleased economists. It marked the biggest drop in claims seen in a month.

"The claims number was good and it's a positive sign for jobs," said Dick Rippe, chief economist at Prudential Equity Group. "All of these numbers are low and consistent with the notion that jobs are growing and the labor market is improving."

The four-week moving average of claims, which smooths out week-to-week fluctuations, rose last week to 329,750, an increase of 5,500 from the previous week. Even with the rise, the level of claims still pointed to a job market that is improving, analysts said.

A government report released earlier this month showed that hiring around the country picked up briskly in April. Employers boosting payrolls by 274,000, raising hopes of better days ahead for jobseekers and the economy as a whole. The unemployment rate held steady at 5.2 percent.

While the economy has been moving solidly ahead, the labor market's improvements have been uneven sometimes.

Still, the improvements that are being made on the jobs front have been sufficient to keep the Federal Reserve on its path of gradually raising short-term interest rates. The Fed has boosted interest rates eight times -- each in quarter-point moves -- since last June to keep inflation and the economy on an even keel.

Economists expect additional rate increases through much of this year.

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On the Net:

Jobless claims report: http://www.dol.gov/opa/media/press/eta/ui/current.htm