WASHINGTON -- The number of people filing new claims for unemployment benefits dropped last week to the lowest level in more than three years, a promising sign that companies feel better about the economy's prospects and are less inclined to get rid of workers.
The Labor Department reported yesterday that new applications filed for jobless claims declined by a seasonally adjusted 14,000 to 328,000 for the week ending April 3. That marked the lowest level since Jan. 13, 2001, the week before President Bush's inauguration.
In other economic news, consumers, lured by spring fashions, were in a buying mood in March, another good sign for the economy. Consumer spending accounts for roughly two-thirds of all economic activity in the United States, making it a major factor in shaping the economic recovery.
Wal-Mart Stores Inc., Costco Wholesale Corp., Limited Brands, J.C. Penney Co. Inc., and Nordstrom Inc. all reported results that topped Wall Street forecasts. The robust results cut across industry sectors.
But on Wall Street, concerns about the deteriorating situation in Iraq pulled the Dow Jones industrial average lower. The index lost 38.12 points to close at 10,442.03.
The jobless claims figures were better than economists had expected. They had called for a slight decline from the previous week to around 340,000.
The four-week moving average of claims, which smooths out weekly fluctuations, also went down last week by 3,250, to 336,750. That represented the lowest level since Nov. 25, 2000.
The latest snapshot of layoffs raised hopes that recent improvements in the labor market might be sustained. A complete turnaround in the jobs market is the one missing piece of the economic recovery puzzle, analysts say.
''I think executives' mindsets are changing," said Clifford Waldman, economist at Manufacturers Alliance/MAPI, a research group. ''They went from 'I don't know whether this recovery will stick around so I need to keep a lid on costs' to 'this recovery has the potential to be strong so I better get my workforce in place to meet it.' That's essentially the mentality change."
The employment situation showed signs of turning an important corner in March. The economy added 308,000 jobs last month, the most in four years. While that's an improvement from payroll gains registered in previous months, economists want net job gains in the range of 200,000 to 300,000 a month on a consistent basis before they declare a recovery in the jobs market.
The nation's unemployment rate, meanwhile, edged up to 5.7 percent in March as an improved economic climate beckoned more job seekers to look for work again.
Even with the robust job gains in March, the economy has lost a net 1.84 million jobs since January 2001, the month President Bush took office.
That's something presumptive Democratic presidential nominee John Kerry says is evidence that President Bush's economic policies aren't working. Bush, however, says the robust employment gain in March shows his policies are making the economy stronger and translating into job growth.
Economists believe the economy grew at a healthy annual rate of around 4.5 percent in the first quarter of this year and is expanding close to that pace in the current April-to-June quarter.