After last week's disappointing March jobs report, the Department of Labor released some rather encouraging news on Thursday.

The number of people applying for unemployment benefits fell by 42,000, from 388,000 to 346,000, in the past week. It may be an indicator that the March employment report, which showed an increase of just 88,000 jobs, was either a temporary outlier or vastly underestimates actual hiring.

Monthly jobs reports are adjusted the following month and then again the next. For example, February's jobs report was adjusted upward by 32,000 in March, and may be adjusted upward again next month. The same kind of thing may happen when April's jobs report comes out next month, and the fact that unemployment applications have dropped so sharply may be a good sign.

Stocks were up Thursday morning upon hearing the news, as was consumer confidence, at least among those at the upper end of the income ladder. It is still unclear what effect the recent government sequestration, which began on March 1, will have. The automatic, across-the-board cuts of $85 billion to government programs and services may dent the already sluggish recovery, or it may go largely unnoticed if other areas of the economy—such as housing, which continues to strengthen—can pick up the slack.

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