As foreclosures begin to stabilize in certain parts of the country, it looks like there is finally some good news on the unemployment front. According to new reports from the Labor Department, claims for state unemployment insurance fell 38,000 to a seasonally adjusted 550,000 in the week ended August 1 from 588,000 the prior week.
A Labor Department official described the period under review as "uneventful" and said it appeared the distortions to the weekly data caused by the auto plant closures were out of the way. Analysts polled by Reuters had forecast new claims to edge down to 580,000 last week.
U.S. stock index futures extended gains on the data, while government bond prices slipped.
"The claims data are another sign that the recession could be behind us," said Kevin Flanagan, fixed-income strategist at Global Wealth Management, Morgan Stanley in Purchase, New York.
"I am optimistic that a recovery is in the process of beginning, but we will need to see continued improvement in claims going through (below) the 500,000 level before the consumer is willing to come on board and be part of the recovery."
Analysts said the report also bodes well for July non-farm payrolls data due on Friday.