Drop in jobless claims offer hope for U.S. recovery

But popular website touts Canada as the place to find jobs

New claims for jobless benefits in the United States fell on July 1 to their lowest level in two months, offering cautious hope for an economic recovery.

Initial claims for state unemployment benefits dropped 21,000 to 454,000 last week, and the number of people continuing to receive benefits in the final week of June was the lowest in seven months, the Labor Department said.

Economists had expected first-time claims to decline to just 460,000.

The bigger-than-expected decline in jobless claims on Thursday was a relief after a slew of weak reports had left investors fearing the economy could slip back into recession.

Even so, unemployment remains painfully high and other data showed consumers continue to struggle. Retailers resorted to discounts to keep sales aloft in June, and the Federal Reserve reported U.S. consumer credit dropped more than expected in May.

The Federal Reserve said U.S. consumer credit dropped by $9.15 billion in May, the 15th decline in the last 16 months.

Jobs lag recovery

Job growth has lagged the U.S. recovery, which started in the second half of 2009.

Although layoffs have abated after last year's bloodletting, companies are skeptical of the economy's strength and are reluctant to start hiring workers on a wider scale.

Some economists said a decision by General Motors to limit the number of plants it is shutting down as part of its annual summer retooling may have helped lower claims for jobless benefits last week.

The number of people still receiving jobless benefits during the final week of June after an initial week of aid dropped 224,000 to 4.41 million, the lowest level since November.

That pulled down the insured unemployment rate, which measures the percentage of the insured labor force that is jobless, to 3.4 per cent from 3.6 per cent the prior week.

The number of people on emergency benefits dropped 367,948 to 4.15 million in the week ended June 19. About 45 per cent of the 14.6 million people unemployed in June had been out of work for six months and more.

For unemployed Americans not having any luck finding jobs in the U.S., an article on the Huffington Post website suggests the move to Canada where "hiring is booming and home prices are rising."

Canada, which has about one-tenth the population of the U.S., created about 93,000 jobs in June compared to 83,000 private-sector jobs in America, stated the article.

Canada's unemployment rate fell from 8.1 per cent to 7.9 per cent in June, compared to an unemployment rate of 9.5 per cent in the U.S.

A reader poll (not scientific) at the end of the article found 56 per cent of readers would move to Canada for a job, 17.8 per cent would stay in the U.S. and 26 per cent said it would depend on the salary or how long it would take to find a job.

With files from Reuters

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