WASHINGTON — The number of Americans applying for unemployment benefits dropped by 35,000 last week, the Labor Department said Thursday.
Applications fell to a seasonally adjusted 353,000. That’s down from a revised 388,000 the previous week and the biggest drop since February 2011.
The four-week average, a less volatile measure, declined 8,750 to 367,250. That’s the lowest level since the end of March.
“All in all, the labor market is gradually healing,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pa. “We’ve got to take this report with a grain of salt. The jobs market is still tough and we’re setting ourselves up for a soft second half of the year.”
Applications surged two weeks ago, reversing a big drop the previous week. But economists caution that the government struggles every July to account for temporary summer shutdowns in the auto industry. The adjustments have been unusually difficult this year because some automakers skipped their shutdowns in the face of stronger sales, resulting in fewer temporary layoffs.
Unemployment-benefit applications are a measure of the pace of layoffs. When applications consistently fall below 375,000, it typically suggests hiring is strong enough to pull the unemployment rate down.
The job market has slumped over the past three months. Employers added an average of just 75,000 jobs a month from April through June, down from a healthy 226,000 the first three months of the year.
The unemployment rate remained at 8.2 percent in June.
The broader economy has also weakened from the start of the year.
Retail sales fell in June for the third-straight month, bad news for a country that gets two-thirds of its economic output from consumer spending. Manufacturing activity shrank in June for the first time in three years, according to a closely watched survey from the Institute of Supply Management.
Economists are predicting growth slowed in the April-June quarter to an annual pace of just 1.5 percent, down from a 1.9 percent annual pace in the first three months of the year. Growth of 1.5 percent is consistent with fewer than 50,000 new jobs a month.
The government is set to issue its first estimate for second-quarter growth today.
Europe’s debt crisis could weaken growth further. Europe buys roughly one-fifth of U.S. exports, which have been one of the economy’s few bright spots.
The British government reported Wednesday that Britain’s economy shrank 0.7 percent in the April-June quarter, far worse than economists had expected. In Germany, business confidence dropped more than expected in July over increasing worries about the impact of Europe’s debt crisis on the region’s biggest economy. And Spain this week said the economy contracted 0.4 percent in the second quarter.
Information for this article was contributed by Lorraine Woellert of Bloomberg News.
Business, Pages 29 on 07/27/2012