New claims for jobless benefits fell by 5,000 from the previous week, to their lowest level since April 2008, the U.S. Labor Department said Thursday, following Federal Reserve Chairman Ben Bernanke's recent warning that improved employment data seem out of sync with the economy's overall pace of growth.
For the week ended March 24, initial applications for unemployment-insurance payments declined to 359,000 compared to the previous week's upwardly revised figure of 364,000. Economists polled by Reuters had forecast claims to come in at 350,000.
This week's data reflect the Labor Department's annual revision of weekly claims statistics to reflect seasonal factors.
The four-week moving average, considered a more accurate measure of labor market trends because it smooths out weekly fluctuations, was 365,000, a decrease of 3,500 from the previous week's upwardly revised average of 368,500 for first-time benefit applicants.
Job gains are of great importance because they lead to income growth, which in turn supports consumer spending. Consumers account for more than 70 percent of U.S. economic growth.
The labor market condition has improved considerably from even three or six months ago, Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Conn., said before Thursday's report. What would worry me is that, at least up until now, the pace of economic growth hasn't really kept up.
The economy has added an average of nearly 250,000 jobs over the past three months and the unemployment rate has tumbled from to 8.3 percent from 10 percent in a little over two years. However, economists aren't convinced that the rapid rate of decline will be sustained.
The unemployment rate will probably continue to fall, but not nearly as fast as what we've seen in the last several months, Stanley said.
Earlier this week, Bernanke said recent net job gains are more the result of unusually low layoffs and employee resignations rather than substantive gains in the hiring rate. Hiring rates will need to rise further in order to achieve a faster pace of recovery in the labor market.
Further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, Bernanke said Monday at the National Association for Business Economics' annual conference.
The Fed chairman's comments reveal that the central bank isn't yet convinced that the recent pace of labor market gains can last.
We cannot yet be sure that the recent pace of improvement in the labor market will be sustained, Bernanke said, adding that he was particularly concerned about the number of Americans out of work for six months or longer.
The U.S. economy grew by 3 percent during the final quarter of 2011, its fastest rate in 18 months, the Commerce Department reported Thursday.
Gross domestic product, which measures all goods and services an economy produces, expanded by an inflation-adjusted annual rate of 1.7 percent for all of 2011, according to Commerce's final assessment of the quarter. The 2011 figure, which like the quarterly one, was unrevised, is in comparison to a 3.0 percent growth rate throughout 2010.
Stanley pointed out that if the labor market is improving significantly faster than economic activity, at some point, the two will have to merge in some way.
The hope is they converge by a pickup in economic growth, Stanley added. But it could also be the case that the pace of improvement in the labor market slows down.
The number of people filing for benefits after an initial week of aid decreased by 41,000, to 3.4 million in the week ended March 17.
The continuing-claims figure doesn't include Americans who are receiving extended benefits under federal programs.
The four-week moving average for the week ended March 17 fell 21,750 to 3.39 million from the preceding week's revised average of 3.41 million.
Stock index futures slipped Thursday. S&P 500 futures lost 3.9 points and Dow Jones Industrial Average futures were down 32 points.