New Jobless Benefit Claims Fall by 60,000

Defying a sluggish economy, new claims for jobless benefits showed their sharpest one-week decline in more than a year, the Labor Department reported Thursday.

New claims for state unemployment benefits -- an indication of the severity of worker layoffs -- fell by a seasonally adjusted 60,000 to 378,000 for the workweek ended Dec. 21 from a revised 438,000 for the prior period.

It was the second consecutive week in which new jobless claims dropped and the steepest plunge since October 2001.

The decline was seen as an encouraging -- but not definitive -- sign that the nation’s economy may be recovering after a year of stumbling over lackluster business spending, a slumping stock market and massive layoffs in the beleaguered telecommunications industry.

The numbers sparked an early market rally, but the Dow Jones industrial average and Nasdaq both closed down. The Dow fell 15.50 points to 8,432.61, and Nasdaq dipped 4.58 points to 1,367.89.

Analysts cautioned that jobless benefits numbers are too erratic to read too much into a single week’s tally. In particular, the Thanksgiving-to-Christmas period is often skewed by short work schedules and bad weather.

“This is unmitigated good news,” said Robert Litan, an economist at the Brookings Institution, a think tank in Washington. “Sixty thousand is a big number. And it could be a harbinger that we had stronger growth in the fourth quarter than most forecasters had been expecting. But I’m not ready to predict that because these are volatile” reports.

The number of new claims was down more sharply than economists had forecast, and Labor Department officials ventured no explanation for the surprising results.

However, experts say weaknesses in the overall job market have been obscured by transitory government hiring, mostly of airport security guards and other homeland security staffing.

The Labor Department’s report was not all positive. The agency noted that its four-week moving average of jobless claims, which irons out week-to-week fluctuations, rose to 404,500, the highest mark since the week ended Oct. 19.

Moreover, the Labor Department reported that the number of people who continue to draw unemployment benefits fell just 12,000 to 3.46 million in the week ended Dec. 14, signaling that the rate of new hiring did not increase as dramatically as claims decreased.