The US Labor Department reported Thursday that initial claims for jobless benefits fell 35,000 last week, easing concerns that the US job market is headed for weakness as the ongoing sovereign debt crisis in Europe continues to drag on the global economy. Claims had been increasing in recent weeks and job creation had slowed since reaching post-recession highs from December to February. The model used by the Labor Dept. to calculate claims has been challenged this year, as automakers have been less predictable with plant shutdowns over the summer.
According to Thursday's report, initial claims came in at 353,000 last week. The four-week moving average of claims, meanwhile, fell by 8,750 to 367,250. The four-week average is designed to smooth out seasonal volatility seen in the weekly data, and is viewed as a better indicator of hiring and firing trends by most economists. Concern about the job market had been increasing over the last few months, particularly when the unemployment rose to 8.2 percent in June as the economy added just 80,000 jobs.
The US labor market has now suffered three straight months without adding as many as 100,000 jobs, a figure considered just enough to account for workforce additions stemming from population growth. The Federal Reserve last week indicated it stands ready to take further stimulus action should the economy take a turn for the worse, leaving economists and investors hungry for a third round of quantitative easing, commonly referred to as QE3.