NEW YORK (CNN/Money) -
The number of Americans seeking unemployment assistance tumbled last week to the lowest level in three-and-a-half years, the government reported, coming in well below economists' expectations.
Initial claims for unemployment insurance dropped by 25,000 to 315,000 in the week ended May 1, the U.S. Labor Department reported. That's down from the previous week's revised figure of 340,000, and below estimates for 335,000, according to Briefing.com.
The figure is the lowest since October, 28, 2000.
The four-week average of initial claims, which irons out weekly fluctuations, slipped to 343,250 last week from a revised 347,000 the prior week.
The Labor Department said the overall number of people on the benefit rolls who had already received an initial week of aid fell to 2,935,000 from a revised 3,004,000 the previous week.
Following the report, stocks turned lower in early trading and bond prices fell, sending the yield on the 10-year note up to 4.60 percent.
The initial jobless report leads up to Friday's highly anticipated unemployment and payroll report for April. Economists expect that non-farm payrolls will rise by 165,000, a strong figure, but below the initial reading of 308,000 in March.
A payroll report similar to March's will emphasize the broad recovery for the economy and the notion that inflation is returning. Underscoring the return of inflation was Thursday's productivity report, showing an unexpected rise in the cost of employing workers.
The Federal Reserve kept its key overnight borrowing rate at 1 percent Tuesday, but altered its accompanying statement, saying it could take a measured approach to lifting its accommodative monetary policy.
A series of strong reports from the job market may force the central bank's hand to raise rates sooner than previously anticipated.