By Li Hongmei
The number of Americans filing new claims for jobless benefits fell last week to a near six-year low, bolstering the case for the Federal Reserve to wind down an economic stimulus program.
Another economic report on Thursday confirmed a solid pace of economic growth in the second quarter, although it also showed a worrisome decline in consumer prices.
Initial claims for state unemployment benefits dropped 5,000 last week to a seasonally adjusted 305,000, the Labor Department said.
That points to a labor market that is continuing to heal from the 2007-09 recession despite this year's harsh government austerity and mounting concerns that political dysfunction could trigger a sovereign debt crisis.
The drop in claims could bode well for employers adding workers to their payrolls and sooth concerns at the Federal Reserve, which last week said it was postponing a plan to reduce monthly bond purchases aimed at keeping interest rates low to support the labor market.
"Claims are signaling further acceleration in payrolls gains," said Jim O'Sullivan, an economist at High Frequency Economics in Valhalla, New York.
Economists polled by Reuters had expected the number of new claims to rise last week, and the decline fueled gains in stock prices and yields on U.S. government debt.
The reading gives a clearer view of the labor market's health after an update in government computer systems in California and Nevada threw claims data into disarray earlier this month.
The updates created a backlog in unprocessed claims that had been distorting the data, but a Labor Department analyst said both states had reported they had caught up in counting new filings.
The four-week average of new claims, which smooths out weekly volatility, fell 7,000 to 308,000, the lowest level since June 2007.
In a separate report, the U.S. government said it still estimated that U.S. gross domestic product, a measure of all the goods and services produced in the economy, grew at a 2.5 percent annual rate between April and June.
That is a respectable pace of growth, especially considering that Washington hiked taxes in January and slashed the federal budget in March.
