U.S. Jobless Claims Drop Below 1 Million For First Time Since Mid-March

A report released by the Labor Department on Thursday showed first-time claims for U.S. unemployment benefits declined by much more than anticipated in the week ended August 8th.

The Labor Department said initial jobless claims tumbled to 963,000, a decrease of 228,000 from the previous week's revised level of 1.191 million.

Economists had expected jobless claims to slide to 1.120 million from the 1.186 million originally reported for the previous week.

With the much bigger than expected decrease, jobless claims dropped below 1 million for the first time since the week ended March 14th.

"The drop in claims reflects economic reopening, but it also suggests the expiration of federal supplemental unemployment benefits may have convinced some people to stop collecting and find work," said Chris Low, Chief Economist at FHN Financial.

He added, "Alternatively, people could be falling off rolls because they no longer qualify for assistance in the absence of the emergency expansion of eligibility."

The less volatile four-week moving average also fell to 1,252,750, a decrease of 86,250 from the previous week's revised average of 1,339,000.

Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also slumped by 604,000 to 15.486 million in the week ended August 1st.

The four-week moving average of continuing claims plunged to 16,169,500, a decrease of 454,500 from the previous week's revised average of 16,624,000.

Last Friday, the Labor Department released a separate report showing employment increased by more than expected in the month of July.

The Labor Department said employment jumped by 1.8 million jobs in July after surging up by 4.8 million jobs in the previous month. Economists had expected employment to increase by 1.6 million jobs.

With the continued increase in employment, the unemployment rate dropped to 10.2 percent in July from 11.1 percent in June. The unemployment rate was expected to dip to 10.5 percent.