The number of laid-off workers filing claims for unemployment benefits fell to the lowest level in seven weeks, an unexpected sign of improvement for the jobs market.
The Labor Department reported Thursday that new applications for unemployment benefits totaled 311,000 last week, a drop of 9,000 from the previous week. It marked the lowest level for jobless claims since July 28.
The decline came as a surprise for economists who had been forecasting a rise in claims of around 6,000.
The four-week average for claims, which smooths out some of the volatility, also showed an improvement, falling to 320,750 from 324,250 the previous week.
The labor market is being closely monitored for any signs that recent turmoil in financial markets and a deepening slump in housing are causing serious problems for the overall economy. Analysts believe the risks of a recession have risen significantly.
To ward off a possible downturn, the Federal Reserve on Tuesday cut a key interest rate by a half point. It was the first reduction in the federal funds rate in more than four years and was double the quarter-point change many analysts had expected.
The rate cut occurred after a report earlier this month showed that businesses cut 4,000 jobs from their payrolls in August. It was the first monthly job loss in four years, led by sharp declines in manufacturing as well as construction, which has suffered from the worst downturn in housing in 16 years.
For the week ending Sept. 8, a total of 34 states and territories reported declines in the number of people filing jobless claims while 19 reported increases.
The biggest declines were in California, a drop of 4,349, reflecting fewer layoffs in construction and trade industries, and Texas, which had a drop of 2,470 that officials attributed to fewer layoffs in finance and manufacturing. Other big declines were in New York, Florida, Wisconsin and Kentucky.
States with big increases were Michigan, up 1,741, reflecting rising layoffs in the auto industry, and Georgia, up 1,268, reflecting higher layoffs in the textile and other manufacturing industries.
Separately, factory activity in the U.S. Mid-Atlantic region rose much more strongly than expected in September, a survey showed on Thursday.
The Philadelphia Federal Reserve Bank said its business activity index was at 10.9 in September versus 0.0 in August.
Economists polled by Reuters had forecast a reading of 2.3. Any reading above zero indicates growth in the region's manufacturing sector.