Claims for Unemployment Benefits Drop as Labor Market Strengthens

Fewer Americans than forecast filed applications for unemployment benefits last week, a sign the labor market continues to strengthen. Jobless claims fell by 27,000 to 300,000 in the week ended May 24, as reported by the U.S. Labor Department. The median forecast of 50 economists surveyed by Bloomberg called for 318,000. The four-week average declined to the lowest level since August 2007, before the last recession began. Fewer dismissals may be a sign that companies are gearing up for improving demand as the economy shows signs of rebounding. Gains in the labor market are needed to support consumer spending, which accounts for 70 percent of the economy.

A separate report from the Commerce Department showed that the U.S. economy contracted for the first time in three years from January through March as companies added to inventories at a slower pace and stalled investment. Gross domestic product fell at a 1 percent annualized rate in the first quarter, a larger decline than projected, after a previously reported 0.1 percent gain. The four-week average of claims, a less-volatile measure than the weekly figure, decreased to 311,500 from 322,750 the previous week. The number of people receiving unemployment benefits fell by 17,000 to 2.63 million in the week ended May 17. The unemployment rate among people eligible for benefits held at 2 percent in the week ended May 17, today’s report showed.