Unemployment Apps Drop But Remain Stubbornly High

The Associated Press reports:

WASHINGTON (AP) -- Fewer Americans applied for unemployment benefits last week, though applications remain above levels consistent with a healthy economy.

Unemployment benefit applications fell 16,000 to a seasonally adjusted 414,000, the second drop in three weeks, the Labor Department said Thursday. That's a positive sign that layoffs are slowing.

Still, applications have been above 400,000 for 10 straight weeks, evidence that the job market is weak compared to earlier this year.

Applications had fallen in February to 375,000, a level that signals sustainable job growth. They stayed below 400,000 for seven of nine weeks. But applications surged in April to 478,000 -- an eight-month high -- and they have declined slowly since then.

The four-week average, a less volatile measure, was unchanged.

Economists said the report signals that the job market is improving, but at a very slow pace.

"This is not a derailing of the economy," said Bricklin Dwyer, an economist at BNP Paribas. "This is a period of weak growth, and we're going to see this for some time."

Separately, builders broke ground on more new homes in May, but not enough to signal a recovery in the housing market. New-home construction rose 3.5 percent from April to a seasonally adjusted annual rate of 560,000 units per year, the Commerce Department said Thursday. Economists say the pace of construction is far below the 1.2 million new homes per year that must be built to sustain a healthy housing market.