US jobless claims fall, but labour market stays weak

A better than feared report on US jobless claims sparked a rare bout of optimism about the American economy yesterday, though underlying data continued to underscore the weak state of the labour market.

The number of Americans making new claims for unemployment insurance fell by 31,000 to 473,000 last week, according to the US Labor Department. Analysts had pencilled in a drop to 490,000.

Weighing against that was the news that the four-week average of new claims, which is seen as a better barometer of underlying trends, had climbed by 3,250 to 486,750, its highest level since November.

The data follows some grim figures on the US housing market and an uninspiring report on the demand for long-lasting manufactured goods, sparking worries about the prospect of another contraction in the American economy.