New Jobless Claims Dip

New applications for jobless benefits fell 20,000 in mid-December, the government said Thursday, but the number of claims remained at levels typical of a recession.

The Labor Department said first-time unemployment claims for the week ended Dec. 14 fell to 473,000 from 493,000 the prior week, which was inflated by a surge of applications after the Thanksgiving holiday.

“This is still at a very bad level,” said Russ Sheldon, senior economist at Mellon Bank in Pittsburgh.

The four-week average rate of new claims, considered a more reliable indicator of the job market’s health, has risen steadily since November, reversing the summer’s downward trend.

For the past four weeks, claims averaged 464,000, up from 449,000 in the prior four-week period, and compared to about 415,000 in August.

“(It) reflects all the layoffs for the end of the year. Companies are slashing payrolls to get the tax write-offs and clear their slates for a better year ahead,” Sheldon said.

The rise in mid-December claims for state unemployment aid could point to a surge in the national jobless rate for the month to 7% from 6.8%, economists said.

The number of jobs in the overall economy could shrink by about 50,000 when December’s employment report is released Jan. 7, they said. The survey for that report, a separate Labor Department tally of employers, was conducted the same week as the latest weekly jobless claims data.

Fred Sturm, senior economist at Fuji Securities Inc. in Chicago, said he expects no further dramatic surges in the average weekly jobless claims.

“We don’t see the economy nodding off to the second leg of a double-dip recession. For that reason, we would not see this up-trend in claims for much longer,” he said.

Sturm said the Federal Reserve’s aggressive interest-rate cuts last week should assure a vigorous rebound next summer.

Already the number of people continuing to claim unemployment benefits is stabilizing, he said.

The department also reported that the number of people actually on the jobless rolls fell the week ended Dec. 7 by 138,000 to 3.33 million, the latest period for which data was available.