The number of Americans applying for unemployment benefits fell by 23,000 last week, further evidence that the job market is showing some improvement.
Applications for unemployment aid declined to a seasonally adjusted 340,000 in the week ending May 18, the Labor Department said Thursday. That’s down from 363,000 the previous week and a level consistent with some job gains.
The less volatile four-week average ticked down just 500, to 339,500. That’s close to the five-year low of 338,000 reached during the first week of May. The four-week average is 9 percent lower than in November.
“The underlying story in jobless claims continues to be one of gradual improvement,” Bricklin Dwyer, an economist at BNP Paribas, wrote in a research report.
Unemployment claims are a proxy for layoffs. The decline in claims has coincided with steady job growth over the past six months. Since November, employers have added an average 208,000 jobs a month. That’s up from just 138,000 jobs a month during the previous six months.
Still, much of the improvement has come from fewer layoffs, not robust hiring. Employers laid off just 1.7 million workers in March, only slightly above the 12-year low reached in January. Overall hiring, however, remains far below pre-recession levels.
More than 4.7 million Americans were receiving unemployment benefits the week that ended May 4, down 23 percent from nearly 6.2 million a year earlier.
The United States still has 2.6 million fewer jobs than it did when the recession began in December 2007. The unemployment rate has fallen to a four-year low of 7.5 percent, down from 10 percent in October 2009. Some of the decrease is because many people have given up looking for work. The government counts people as unemployed only if they are actively searching for a job.
For hiring to strengthen enough to lower the unemployment rate to a more normal level of between 5.5 percent and 6 percent, companies must gain more confidence in the economy. But some may be hesitant to add workers because of concerns of deep federal spending cuts and tax increases.
Federal Reserve Chairman Ben Bernanke told a congressional committee Wednesday that the job market is improving, but that higher taxes and government spending cuts likely will slow economic growth this year.
Bernanke said it was too early for the Fed to abandon its extraordinary efforts to boost economic growth. The Fed says it plans to keep its short-term interest rates near zero until unemployment is below 6.5 percent. And it is buying $85 billion a month in Treasury and mortgage bonds to push down longer-term interest rates.
The Fed’s low interest-rate policies are intended to encourage more borrowing and spending, which boosts economic growth.