"There is only so much companies can cut layoffs before they have to start thinking about adding to headcounts"
- Berger, an economist at RBS Securities Inc.
The number of Americans filing new claims for unemployment benefits dropped to the lowest level in more than five-years, suggesting the improvement in the labour market, the Labor Department said Thursday. Initial jobless claims fell to a seasonally adjusted 323,000 in the week ended May 4, down from 327,000 a week earlier and beating analysts' expectations for a 333,000 reading. The reports of the unemployment claims can be choppy from week to week; nevertheless, they are considered to be one of the most important gauges of the job market's strength. At the same time, at the height of the financial crisis in 2009, jobless claims rose as high as 670,000. The less-volatile four-week moving average fell to 336,750, the lowest level since November 2007.
"There is only so much companies can cut layoffs before they have to start thinking about adding to headcounts," said Guy Berger, an economist at RBS Securities Inc. in Stamford, Connecticut, who projected claims would drop to 325,000, the lowest forecast in the Bloomberg survey.
"Firms cut their workforces to the bone during the recession and its aftermath and layoffs are going to remain relatively low pretty much regardless of whether the economy picks up or slows down," said chief economist Stephen Stanley of Pierpont Securities.
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