New claims for unemployment benefits fell last week to their lowest since April of this year. The Labor Department reported the data on Thursday even though statisticians had problems seasonally adjusting the data. Applications for new unemployment benefits fell by 37,000 to a seasonally adjusted 391,000 in the week ending Sept. 24. The Labor Department seasonally adjusted upward 428,000 from the prior week. It is the first time applications have fallen below 400,000 since Aug. 6. Unemployment applications need to typically fall below 375,000 to signal substantial growth.
The drop in the unemployment reading saw new claims below 400,000 for the first time since the week ending August 6. The non-seasonally adjusted reading decreased 28,880.The four-week moving average of claims, which smooths out volatility, fell to 417,000 from 422,250 the prior week.
Despite the good news, the jobs market continues to be sluggish. High unemployment is weighing on the economy, which slowed sharply this year. The Federal Reserve, which is trying to spur growth, expects joblessness to remain elevated through next year. Consumer spending accounts for 70% of the economy and Americans have been holding onto their money because of the weak jobs market.
Businesses have pulled back from hiring after consumer confidence took a plunge in August. Data shows businesses are either holding onto their money or investing in new equipment vice hiring new employees.
The unemployment rate continues to be above 9% in the United States with no clear sign of easing anytime soon. President Barack Obama sent a $447 billion “jobs package” to Congress this month that needs to be addressed by quickly. Economists all agree that the cure for the U.S. economy ills lies in the creation of new jobs.