NEW YORK (CNN/Money) - Jobless claims plunged in the United States last week to their lowest level since January 2001, the government said Thursday, as the labor market continued its recovery from a long slump.
The Labor Department said 348,000 people filed new claims for unemployment benefits in the week ended Nov. 1, compared with a revised reading of 391,000 in the prior week.
It was the lowest number of weekly jobless claims since 339,000 in the week of Jan. 20, 2001. Economists, on average, expected 380,000 new claims, according to Briefing.com.
A spokesman for the Labor Department told Reuters there was no apparent explanation for the enormous drop in claims, but suggested at least some of that drop should be discounted.
"Every week we encourage (people to look at) the four-week average. This is certainly one of those weeks," the spokesman said.
The four-week moving average of new claims, which irons out the volatility of the weekly data, fell to 380,000 in the week ended Nov. 1 from a revised 390,000 in the prior week.
Still, the dramatic one-week drop was perhaps the clearest indication yet that the labor market, which has been mired in its longest slump since World War II, may finally be creating jobs.
"This big decline may seem a little on the aberrant side, and we have to be careful about it, but at least some of it has to be real," said Anthony Chan, chief economist at Banc One Investment Advisors.
U.S. stock market futures were mixed after the report, pointing to a mixed opening on Wall Street. Treasury bond prices fell.
New claims had fluctuated in a narrow range near the 400,000 mark since mid-July. Most economists consider new claims below the 400,000 threshold as a sign of a recovery. Last week was the fifth consecutive week of jobless claims below that level and perhaps the clearest sign yet that the labor recovery is on the mend.
In the report, continued claims, the number of people out of work for a week or more, dipped to 3.51 million for the week ended Oct. 25, the latest data available, from a revised 3.53 million the prior week.
On Friday, the Labor Department reports on October's unemployment rate and the growth of non-farm payrolls. Economists, on average, expect unemployment to remain at 6.1 percent and for 65,000 new jobs to be added to payrolls, according to Briefing.com.
Most economists believe payrolls need to grow by about 150,000 jobs per month in order to keep up with the natural growth of the labor force and keep unemployment from rising.
Last week's rate of jobless claims, if sustained, would be consistent with 150,000 new jobs a month, according to Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd., but the economy is probably not quite there yet.
"We doubt [the] October data will be that strong, but it will not be long," Shepherdson said. "The final element of the recovery is falling into place."