U.S. jobless claims retreat from 500,000 level

The number of Americans filing initial claims for jobless benefits dropped by 31,000 last week, reversing a trend that had seen the figure creep above the half-million mark.

Initial claims came in at 473,000 the week ended Aug. 21, the Commerce Department said Thursday.

"Whew, finally a number that comes in better than expected," BMO economist Jennifer Lee said in a note Thursday. "Yes, [it's] still too high and yes, the prior week was revised higher to 504,000 from 500,000, but any decline is good news and we have to pry away from that pesky 500,000 level."

The four-week moving average came in at 486,750, an increase of 3,250 from the previous week. Economists pay closer attention to the four-week figure because it smooths out fluctuations. It's now at it's highest level since November.

Analysts say the level needs to drop below 400,000 and stay there before concluding that the U.S. economy is actually creating jobs. Initial jobless claims have declined steadily for the past year from a peak of 651,000 in March 2009 as employers reduced layoffs and began hiring.

The figure came steadily lower through 2010 before unexpectedly spiking for the three weeks prior to last.

The total number of Americans receiving jobless benefits cracked the 10 million person level, up by 260,000 people and its highest point since April. The figure has swelled by 1.9 million people in the last four weeks alone.

During the recession, Congress added up to 73 weeks of emergency aid on top of the 26 weeks typically provided by the states. Partisan bickering caused the program to lapse in June, throwing nearly two million people off the rolls.

But since Congress renewed the program in July, the total benefit rolls have increased by 2.2 million, according to Dan Greenhaus, chief economic strategist at Miller Tabak.

"One week a trend does not make, or a few weeks, for that matter," Lee said. "But the trend, as it stands, is still not our friend."