NEW YORK (CNN/Money) - The number of people filing jobless claims fell sharply last week, a government report showed Thursday, as the reading on the employment market came in much stronger than Wall Street expectations.
The Labor Department reported that 310,000 filed for initial jobless benefits in the week ended July 3, on a seasonally adjusted basis. That compares to the revised 349,000 who filed the previous week. Economists surveyed by Briefing.com forecast that 345,000 filed last week.
But much of the decline in the claims data was due to a seasonal adjustment, which anticipated the regular layoff of auto workers due to the closing of assembly plants to prepare for the new model year. This year, many of those layoffs are more likely to occur in this week's data rather than last week's results.
"This won't hold up," said Mark Vitner, economist at Wachovia Securities. "This (drop) really shouldn't have been unexpected."
The non-seasonally adjusted number showed that those filing for initial claims rose to 351,137 in the week ended July 3, an increase of 32,751 from the previous week.
The report is the first reading on the strength of the employment market since Friday's June monthly jobs report, which came in much weaker than expected. Anthony Chan, chief economist with Banc One Investment Advisors, said that even with the distortion caused by the seasonal adjustment, Thursday's report shows the jobs market continues to improve.
"Clearly it's overstated, but this has at least a hint, an aroma of an improving labor market," said Chan.
The seasonally adjusted four week moving average of jobless claims fell 10,250 to 336,000 in this report.
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