Unemployment claims drop, still above 400,000

NEW YORK (CNNMoney) -- The number of Americans filing for first-time unemployment benefits dropped last week, but remained above the 400,000 mark for the 14th straight week.

There were 405,000 initial jobless claims filed in the week ended July 9, the Labor Department said Thursday. That was down 22,000 from the week before, and lower than the 410,000 claims economists surveyed by Briefing.com had expected.

While a level below 400,000 is typically associated with payroll growth, claims have remained above that mark since the beginning of April.

Initial claims might've fallen below 400,000, if not for the ongoing Minnesota government shutdown. The Labor Department noted that as many as 11,500 of the claims filed in the state of Minnesota were a result of state employees filing for benefits.

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There were fewer layoffs in the auto sector, the result of production scheduling changes as Japan's automakers come back online in the wake of its massive earthquake, said Sam Bullard, senior economist at Wells Fargo.

"This trend should continue for the next few weeks and through August," Bullard said. "Claims could go as low as 350,000."

That would be a marked improvement, as claims appear stuck over 400,000, a level Bullard said "is not consistent with solid, sustained job creation."

The four-week moving average of initial claims, calculated to smooth out volatility, also fell. The average was 423,250, or 3,750 claims less than the week before.

But continuing claims -- which include people filing for the second week of benefits or more -- rose to 3,727,000 in the week ended July 9 -- higher than economists' forecasts for 3,700,000 ongoing claims.

The government's monthly jobs report -- the most closely watched indicator of labor market growth -- hit a major roadblock last month, as hiring slowed to a crawl and the unemployment rate unexpectedly rose.

The economy gained just 18,000 jobs in June, coming in even weaker than the paltry 25,000 jobs added in May.