In the week ending July 7, applications for unemployment insurance payments dropped by 26,000 from the previous week's upwardly revised figure of 376,000, to 350,000. The drop, which brought new claims to their lowest level since March 2008, was much steeper than economists' forecast of a decline of 1,000.
A Labor Department official noted that part of the drop might be due to some auto manufacturers -- including Chrysler Group LLC, Ford Motor Company (NYSE: F) and Nissan Motor Co. -- keeping their plants open during the first week of July to meet demand, according to Reuters.
The four-week moving average, which normally provides a better indication of the underlying trend in labor markets than the weekly number of jobless claims, fell 9,750 to 376,500 for first-time benefit applicants.
The number of people filing for benefits after an initial week of aid dropped 14,000 to 3.30 million in the week ending June 30. The continuing claims figure does not include the number of Americans already receiving extended benefits under federal programs. The four-week moving average of people filing for benefits after an initial week of aid for the week ended June 30 increased by 1,250 to 3.31 million.
Job gains are of great importance because they lead to income growth, and that supports consumer spending, which accounts for more than 70 percent of the U.S. economy.
Stock futures are fell. The S&P 500 futures gave up 0.75 percent, to 1,326.30, while the Dow Jones Industrial Average futures fell 0.58 percent, to 12,463.