Jobless claims decline for fourth straight week

The number of laid-off workers filing claims for unemployment benefits fell for a fourth straight week, an encouraging sign that the job market is holding up in the midst of a host of otherwise bad economic news.

Initial jobless claims decreased by 1,000 to 301,000 in the week ended Saturday from a revised 302,000 a week earlier, the Labor Department said Thursday. The four-week moving average, a less volatile measure, fell to a three-month low of 314,750 from 328,750 the previous week.

The week-over-week decline was the fourth straight weekly improvement and pushed claims down to the lowest level in four months.

The string of falling claim numbers was a welcome sign after a big increase in the unemployment rate to 5% in December had increased worries about a possible recession.

The decline in jobless claims was unexpected. Analysts had been forecasting that the number of laid-off workers applying for benefits would rise by 19,000 under a belief that a prolonged slump in the housing industry and a severe credit crunch would prompt businesses to trim their workforces.

Many private economists said the recent declines in jobless claims reflected the government’s problems in adjusting the data around this time of year for seasonal factors. Weekly figures are difficult to interpret during the weeks before and after the year-end holidays because of seasonal hiring and firings, economists said.

“Claims continue to confound,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, N.Y. “This is nothing more than a seasonal adjustment problem. This period of distortion will soon be over and the upward underlying trend will reassert itself.”

Rising worries about a possible recession in the United States triggered a global stock market sell-off at the beginning of this week.

However, Wall Street staged a huge rebound Wednesday as investors became more optimistic after action by the Federal Reserve to cut a key interest rate by a bold three-quarters of a point.

The economy, after racing ahead at an annual rate of 4.9% in the July-to-September quarter, probably slowed to a weak 1% rate in the final three months of last year and may even fall into negative territory in the current quarter.

A recession is often defined as two consecutive quarters of falling economic output. Many economists believe that there is currently about a 50% chance of a full-blown downturn.

The growing worries about the economy in an election year have captured the attention of President Bush and congressional leaders, who are putting together a $140-billion economic stimulus package, including tax relief for households and businesses, in an effort to bolster economic activity.