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Unemployment benefit claims fall to five-year lows

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Unemployment benefit claims fall to five-year lows

Fewer Americans applied for unemployment benefits over the past month than at any time in more than five years, according to the US Department of Labor. Average weekly jobless claims in the month ended August 17 was 330,500, the least since November 2007. This comes even after last week’s jobless claims were 13,000 higher than the week ended August 9.

Waning jobless claims suggest employers are more likely to hold on to workers to meet sales targets, a sign bigger job gains may be on the way. Initial jobless claims capture weekly layoffs in the employed labour force.

Job growth has been one of the most persistent themes tof US recovery, and one of the most important indicators of an economy that is poised to regain its footing. US unemployment has been falling persistently for almost two years. Over that time, the unemployment rate has dropped 1.6 percentage points. According to the US Bureau of Labor Statistics, the unemployment rate in July was 7.4 percent.

Despite waning jobless claims, the US employment situation is a little more complicated than the numbers suggest. Job growth in July slowed to its lowest level in four months, yet the unemployment rate dropped two percentage points. This suggests more discouraged Americans could be exiting the labour force after failing repeatedly to secure a job.

Earlier this month Cisco Systems Inc., the multinational manufacturer of networking equipment, slashed 4,000 jobs after reporting weaker quarterly earnings. The San Jose, California-based company cited weak sales in Japan, China and Europe as the main culprit behind slower revenue growth. This could be a sign of things to come for American companies as the global economy struggles to avoid deeper recession. Despite recent improvement, the Eurozone is still in its nascent stages of recovery. The picture on the Indian subcontinent and Asia-Pacific is murkier, as both regions struggle to contain deeper crises.

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