Unemployment claims fall unexpectedly
The number of recently laid-off workers filing for unemployment benefits dropped unexpectedly last week to the lowest level since July 2008, sparking hope that the job market could be on the mend.
Improved prospects for jobs could help spur consumer spending, a key factor for propelling an economy that has been struggling to pull itself out of the deep recession.
New unemployment claims have been sliding steadily for months, but fell last week by 22,000 to a seasonally adjusted 432,000, according to data from the U.S. Labor Department. Wall Street economists had expected claims to rise to 460,000.
Though the data could be influenced by seasonal factors such as bad weather or the Christmas shopping period, the steady downward trend in claims suggests that employment could be improving along with the economy.
Many economists saw the claims figures as a sign that employers could soon step up hiring. Abiel Reinhart, an economist at JPMorgan Chase, said in a note to clients that he estimated that employers added a net total of 40,000 jobs in December, after cutting 11,000 the previous month.
The Labor Department will report the unemployment rate and monthly jobs figures Jan. 8.
In the weekly statistics, so-called continuing claims from those who have been out of work longer, excluding jobless claimants using extended benefits, dropped 57,000 to 4.9 million as of Dec. 19, the lowest point since February and better than the increase that analysts had expected.
But those continuing claims do not include millions of people who have used up the regular 26 weeks of benefits typically provided by states and are receiving extended benefits for up to 73 additional weeks, paid for by the federal government.
About 4.8 million people were receiving extended benefits in the week that ended Dec. 12, the latest data available, an increase of 200,000 from the previous week. The rise is partly a result of another extension of benefits by Congress in November.
The weekly figures of initial claims showed that California had the second-highest increase, 7,317, caused chiefly by layoffs in construction and service jobs. Michigan, which has the nation’s highest unemployment rate at 15.1%, also had the biggest bump in claims -- 8,382 -- mainly from rising layoffs in the auto industry.
Florida, Iowa and Missouri followed with the next-highest boosts in claims.
At the other end, Tennessee had the largest plunge of all the states with 2,972 fewer initial claims. Illinois followed with a drop of 2,923 as layoffs eased in industries such as construction, trade and manufacturing.
Economists closely monitor initial claims, which are considered a gauge of the pace of layoffs and an indicator of companies’ willingness to hire new workers.
The Associated Press was used in compiling this report.
