Unemployment Claims Drop But Remain Elevated

First-time claims for jobless benefits fell last week, evidence that employers are laying off fewer workers. But claims remain too high to signal steady job creation.

Initial claims for unemployment benefits fell by 24,000 to a seasonally adjusted 456,000, the Labor Department said Thursday. That nearly matched analysts’ estimates, according to Thomson Reuters.

The drop comes after claims rose sharply in the previous two weeks. A Labor Department analyst attributed those increases to seasonal adjustment difficulties around the Easter holiday, which falls on different weeks each year.

The four-week average of claims, which smooths volatility, increased by 2,750 to 460,250. Despite that rise, claims have slowly trended down this year. Applications for jobless benefits peaked during the recession at 651,000 in March 2009.

Still, many economists have been disappointed claims haven’t fallen faster, which would signal more hiring. Many analysts estimate that the four-week average needs to fall below 425,000 to signal sustained job growth.

A separate report from Labor said wholesale prices rose a greater-than-expected 0.7 percent last month as food prices surged by the most in 26 years. But there was little sign of budding inflation in the report, which measures price changes before they reach the consumer. Excluding volatile food and energy costs, wholesale prices rose only 0.1 percent, matching analysts’ expectations.

Employers in March added 162,000 jobs, the most in three years. But the pace of the economic recovery and job creation hasn’t been robust enough to quickly drive down the unemployment rate.

It’s been stuck at 9.7 percent for three months, close to its highest levels since the 1980s.

The tally of people continuing to claim benefits, meanwhile, dropped by 40,000 to 4.65 million, the department said.

That figure lags the initial claims by one week. It doesn’t include millions of people who have used up the regular 26 weeks of benefits typically provided by states, and are receiving extended benefits for up to 73 additional weeks, paid for by the federal government.

About 5.5 million people were receiving extended benefits in the week ended April 3, the latest data available. That’s down by about 500,000 from the previous week’s total.