The Labor Department said today that requests for jobless aid dropped by 21,000 to a seasonally adjusted 454,000. The decline takes claims to their lowest level since early May, erasing the increases of the last two months.
But even as first-time claims fall, the number of unemployed Americans receiving benefits is dropping sharply because their aid is ending.
About 350,000 people saw their benefits cut off in the week of June 19 after Congress left for weeklong recess without extending federal jobless aid. That brings the total to about 1.6 million people who have had their benefits end since May. Those numbers could reach 3.3 million by the end of the month if Congress doesn't pass an extension when it returns from recess.
Initial claims have fluctuated in recent weeks. They have remained stuck near 450,000 all year, after dropping steadily last year from a peak of 651,000 in March 2009.
The four-week average of claims dropped slightly to 466,000. In a healthy economic recovery with rapid hiring, claims usually fall below 400,000.
The tally of people continuing to claim benefits plunged by 224,000 to 4.4 million, the department said.
But that doesn't include another 4.6 million people who received extended benefits paid for by the federal government in the week ended June 19, the latest data available.
The number of people receiving extended benefits is dropping quickly. During the recession, Congress added up to 73 weeks of extra benefits on top of the 26 weeks typically provided by states.
But those extensions expired in late May, leaving about 1.6 million people without unemployment insurance, according to the Labor Department. That figure is expected to grow to 3.3 million by the end of this month.
Democrats in the House and Senate are seeking to renew the extended benefits and continue them through November. But Senate Republicans have blocked the extension, citing deficit concerns.
Democrats push to extend benefits for unemployedMortgage Rates at Lowest Level of the Year