By Christopher S. Rugaber
AP Economics Writer
Washington (AP) — First-time claims for unemployment benefits dropped last week in the U.S. for the third straight week, a sign the job market is slowly recovering.
Initial claims for unemployment insurance fell by 7,000 to a seasonally adjusted 444,000, according to the Labor Department Thursday. That’s above economists’ forecasts of 440,000, according to Thomson Reuters.
Layoffs have dropped back to pre-recession levels and employers have slowly resumed hiring as the economy recovers from the worst recession since the 1930s.
That has brought claims down from a peak of 651,000 in March 2009. But many economists are concerned that claims haven’t fallen faster this year. Instead, the claims have fluctuated around 450,000.
That’s above the 425,000 level that many economists say claims need to drop below to signal sustained job growth.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the report may indicate that while large firms are hiring, small companies are still cutting jobs.
“Claims only capture the latter effect,” according a note to clients attributed to Shepherdson.
The four-week average of claims, which smoothes fluctuations, declined 4,750 to 458,500, its first decrease in five weeks.
Several recent economic indicators show that the recovery is gaining strength. But so far the economy hasn’t grown fast enough to bring down the unemployment rate.
When the government releases the April jobs report on Friday, analysts forecast that it will show the unemployment rate was stuck at 9.7 percent for the fourth straight month. Employers are expected to add 200,000 jobs, though as many as half those new jobs may be temporary Census workers carrying out the 2010 Census, economists said.
One factor keeping the unemployment rate high is that thousands of people have re-entered the labor force after giving up on job hunts during the recession. When jobless people don’t look for work, they aren’t counted in the official unemployment rate.
Another factor is high productivity growth. In a separate report, the Labor Department said productivity grew by 3.6 percent in the first three months of this year, much more than forecast.
Higher productivity helps boost living standards in the long run, as more productive workers can demand higher wages. But it also enables employers to delay hiring and increase output from their existing work forces.