Initial unemployment claims fell more than expected last week, while the total number of people receiving benefits continued to swell, a sign that jobs remain scarce amid the deepest recession in decades, the Labor Department reported Thursday.
The Labor Department said initial jobless claims dropped to a seasonally adjusted 654,000, down from a revised 674,000 the previous week. Most analysts had expected new claims to come in at about 660,000. A year ago, claims stood at 358,000.
More significant, the four-week average of claims — considered by many economists to be a more reliable indicator because it smooths out fluctuations — fell slightly to 657,250, its first drop after 11 straight increases.
But the total number of American workers receiving unemployment benefits, known as continuing claims, rose to 5.84 million in March from 5.75 million the previous month. The increase brought the number of laid-off workers to the highest level on records that date to 1967, although the total labor pool has grown significantly over the years. The continuing claims data do not include 1.54 million Americans who received benefits under an extended unemployment compensation program approved by Congress last year.
Kentucky saw the largest jump in claims for the week ending March 28, an increase of more than 5,000 due to layoffs in the auto and manufacturing industries. Michigan, Illinois, Ohio and Tennessee reported the next largest increases.
California had the biggest drop in recipients of more than 7,000, which it said was due to fewer layoffs in the service and manufacturing industries. Pennsylvania, Missouri, Kansas and Minnesota had the next largest drops.
Meanwhile, struggling employers continued to announce further layoffs. Goodyear Tire & Rubber said it will cut 5,000 jobs, or about 7 percent of its employees, this year. Equipment maker Deere & Co. said 160 employees at its plant near Des Moines, Iowa, will be laid off later this month owing to reduced demand.
White House economic adviser Lawrence Summers said Thursday he expected the economy to bottom out in the next few months.
Speaking at the Economic Club of Washington, Summers said the feeling that the economy was like "a ball falling off the table" that started last fall may finally be near an end.
"I think we can be reasonably confident that that's going to end within the next few months and you will no longer have that sense of free fall," he said.
And there was a positive sign on the economic front: Banking giant Wells Fargo said Thursday it expected to report record earnings in the first quarter, smashing estimates by analysts. The firm said it expected to earn $3 billion, or 55 cents a share, for the first quarter; analysts had forecast earnings of 23 cents a share.
The Dow Jones industrial average rose by more than 145 points within minutes of the opening of U.S. markets Thursday and continued an upward path in the first half-hour of trading.
Also Thursday, the Commerce Department reported that the U.S. trade deficit plunged unexpectedly in February to the lowest level in more than nine years as the steep recession pushed imports down for a seventh straight month, while U.S. exports managed a small rebound.
The department said the deficit dropped a sharp 28.3 percent to $25.97 billion, the smallest gap since November 1999. It marked the seventh consecutive month that the trade deficit has declined as the severe U.S. recession has cut sharply into demand for imported products.
Wall Street economists surveyed by Thomson Reuters had expected the trade deficit to widen to $36.4 billion in February.
From wire service reports