Weekly US jobless claims drop 42K to 338K

WASHINGTON (AP) — The number of Americans applying for unemployment benefits dropped by 42,000 last week to a seasonally adjusted 338,000, the biggest drop since November 2012.

But economists say the figures from late November and December are warped by seasonal volatility around the Thanksgiving, Christmas and New Year's holidays.

The Labor Department reported today that the less-volatile four-week average rose 4,250 to 348,000.

Claims had jumped 75,000 over the two weeks that ended Dec. 14 before plunging last week. The Labor Department struggles to account for seasonal hiring by retailers and other businesses and for temporary layoffs of cafeteria workers and other employees at schools that close for the holidays.

Unemployment claims are a proxy for layoffs and the recent declines are consistent with a solid job market.

The economy has shown signs of improvement recently, so much so that the Federal Reserve announced Dec. 18 that it would reduce its stimulus spending on bonds by $10 billion — to $75 billion a month. The economy expanded at a 4.1 percent annual pace from July through September, the fastest rate since late 2011 and much greater than previously thought.