Unemployment claims drop below 400,000

Associated Press

WASHINGTON

After calamitous losses on Wall Street and fears of another recession, the economy got a dose of good news Thursday: The number of people applying for unemployment benefits fell below 400,000 for the first time since April.

Layoffs are easing in most states, and some economists are predicting mild improvement in job growth.

The brighter outlook was enough to catapult stocks. The Dow Jones industrial average closed up 423 points. Broader indexes also ended the day higher.

Weekly unemployment applications fell to a seasonally adjusted 395,000, the Labor Department said. They had been above 400,000 for the previous 17 weeks. The four-week average, a less volatile figure, fell to 405,000. That’s the lowest level since mid-April.

Steven Wood, chief economist at Insight Economics, said the declining trend in applications is an encouraging sign for the job market.

“Although the labor market also hit a ‘soft patch’ along with most of the rest of the economy during the spring and early summer, it now appears to be strengthening, at least a little, again,” Wood wrote in a research note.

Still, analysts responded with some caution. Applications would have to fall below 375,000 to signal healthy job growth, a level not seen since February.