US jobless claims fall to lowest level since August 2008

New claims for US unemployment benefits fell more than expected last week, reaching levels not seen since August 2008, official data showed yesterday.

Initial claims fell to 429,000 in the week ending July 10, down 29,000 from the previous week's revised level, the Labour Department said. It is the second consecutive strong decline in the number of people claiming unemployment benefits.

The data was far better than market expectations.

Most analysts had expected the number of Americans claiming jobless benefits to hit around 450,000.

Labour Department officials said the drop was due, in part, to a fall in temporary layoffs.

Experts had expected the figure to be skewed as manufacturers like General Motors eschewed their normal summer shutdowns in favour of retooling plants.

On Wednesday the US Federal Reserve raised its end-of-year unemployment forecast from 9.2 to 9.5 per cent, predicting the troubled labour market would recover more slowly than expected.

The current unemployment rate stands at 9.5 per cent.

Unemployment is not expected to drop below seven per cent before 2013, leaving millions of Americans out of work.

The Labour Department yesterday reported that nearly 4.7 million Americans depend on government unemployment benefits.