NEW YORK (CNN/Money) - New jobless claims in the United States fell last week, the government said Thursday, but stayed well above a benchmark level pointing to weakness in the labor market.

The Labor Department said the number of Americans filing new claims for unemployment benefits fell to 425,000 in the week ended May 3 from an upwardly revised 453,000 the prior week. Economists, on average, expected 438,000 new claims, according to a Reuters poll.

U.S. stock market futures continued to fall after the report, pointing to a negative opening on Wall Street. Treasury bond prices rose.

CNNfn's Kathleen Hays takes a closer look at why businesses are so reluctant to hire even though the economy is showing signs of improvement. Play video (QuickTime, Real or Windows Media)

The report comes just days after the Labor Department reported that the U.S. unemployment rate rose to 6.0 percent in April, matching the highest level since 1994, as non-farm employers cut 48,000 jobs from payrolls.

Private non-farm payrolls are 2.7 million jobs lower than they were in March 2001, when economists at the National Bureau of Economic Research say a recession began. After a brief recovery in mid-2002, the labor market has worsened in recent months.

Most economists have said for months that the economy's biggest problem was the U.S.-led war with Iraq. According to this view, businesses would make long-term spending and hiring plans when the war was over.

However, even after the war has essentially been over for weeks, jobless claims have been consistently high, drawing the attention of Federal Reserve chairman Alan Greenspan, who warned last week they were a sign of business caution that could slow down an economic recovery.

Earlier this week, the Fed kept its target interest rate steady at a 41-year low, and warned the risks to the economy were tilted toward deflation, an unstoppable drop in prices that hurts corporate profits and weakens the economy.

Some economists worry businesses will not start hiring again until they see demand pick up significantly. Since there's little pent-up demand on the part of consumers, whose spending makes up more than two-thirds of the economy, it seems likely that it will take months before the labor market begins growing significantly.

In the Labor Department's report Thursday, the four-week moving average of weekly jobless claims, which irons out the ups and downs of the volatile weekly data, rose to 446,000 -- the highest level since 449,000 in the week ended April 20, 2002 -- from a revised 442,750 the prior week.

Continued claims, the number of people out of work for a week or more, edged up to 3.665 million in the week ended April 26, the latest data available, from a revised 3.66 million the prior week.