The number of newly laid-off workers seeking unemployment benefits fell last week, the government said Thursday, a sign that the job market is making gradual improvement.
Job losses are likely to slow in coming months, economists said, a trend that could be reflected in the government's July unemployment report to be released Friday.
"We believe the lower claims figures are an important economic development and confirmation that the economy is turning the corner," Joseph LaVorgna, chief U.S. economist at Deutsche Bank, wrote in a note to clients.
First-time claims for jobless benefits dropped to a seasonally adjusted 550,000 for the week ending Aug. 1, down from an upwardly revised figure of 588,000 in the previous week, the Labor Department said.
That was much lower than analysts' estimates of 580,000, according to a survey by Thomson Reuters. And the four-week average of claims, which smooths out fluctuations, dropped to 555,250, its lowest point since late January.
Among the states, Ohio had the biggest increase in claims, with 891, followed by Oklahoma, Mississippi, Louisiana and Alaska. State data lags behind initial claims data by one week.
North Carolina had the largest drop in claims, with 9,809, which it said was due to fewer layoffs in the textile, furniture, rubber and plastics, and industrial machinery industries. Michigan, Florida, Georgia and Alabama had the next-largest declines.
The number of people continuing to claim benefits nationwide rose by 69,000 to 6.3 million, after having dropped for three straight weeks evidence that job openings remain scarce and the unemployed are having difficulty finding new work.
The figures for continuing jobless claims lag behind those for initial claims by a week.
Some economists now say Friday's unemployment report could show much smaller job losses in July than in recent months. LaVorgna has reduced his estimate of payroll cuts to 150,000, from 325,000. In June, employers cut a net total of 467,000 jobs.
Still, many retail chains reported sluggish July sales Thursday as consumers proved reluctant to spend. Mall-based chains, such as Cincinnati-based Macy's Inc. and teen retailers, such as New Albany, Ohio-based Abercrombie & Fitch, were the hardest hit as shoppers focused on necessities.
Financial markets were mixed in morning trading. The Dow Jones industrial average rose about 5 points, while the broader S&P 500 declined slightly.
When emergency extensions of unemployment are included, the total jobless benefit rolls climbed to a record 9.35 million for the week ending July 18, the most recent period for which figures are available. Congress has added up to 53 extra weeks of benefits on top of the 26 typically provided by the states.
Despite the decline in new jobless claims, they remain far above the 300,000 to 350,000 that analysts say is consistent with a healthy economy. New claims last fell below 300,000 in early 2007.
The recession, which began in December 2007 and is the longest since World War II, has eliminated a net total of 6.5 million jobs. The unemployment rate is expected to rise to 9.6 percent when the July figure is reported Friday.
More job cuts were announced this week. The publisher of the Milwaukee Journal Sentinel said it would slash 92 jobs as the current advertising slump continues to ravage the newspaper business. Elsewhere, about 6,000 General Motors Co. blue-collar workers have taken the latest round of early retirement and buyout offers. But GM wants to cut about 13,500 workers, setting the stage for more layoffs.