Jobless Claims Take Drop, But Remain High

The number of U.S. workers on jobless benefits rolls hit a 26-year high last month, although initial claims dipped last week, data showed on Thursday, underscoring the rapid deterioration in the labor market.

AP

The Labor Department report is the latest in a series painting a bleak picture of an economy that slipped into recession in December last year.

The four-week moving average of new weekly jobless claims, a better gauge of underlying labor trends because it irons out week-to-week volatility, rose to 524,500 last week, the highest reading since Dec. 18, 1982. This compared to 518,250 the prior week.

A Labor Department official said there were no special factors influencing the report.

Analysts said the report highlighted the fragile state of the economy and did not bode well for November's non-farm payrolls report from the government due on Friday.

"We're at a high level to begin with. The consensus is looking for a pretty deep recession. The bar's been lowered as far as economic activity, and this is still consistent with we're in a recession and it's going to be a while,'' said Robert Macintosh, chief economist at Eaton Vance Corp in Boston.

Data on Wednesday showed U.S. private employers cut 250,000 jobs in November, the biggest layoffs in seven years, after eliminating 179,000 positions in October.

That left analysts predicting a steeper decline in November's non-farm payrolls. The unemployment rate surged to a 14-year high of 6.5 percent in October.

Although Thursday's data showed initial claims for state unemployment insurance benefits unexpectedly fell last week to a seasonally adjusted 509,000 from 530,000 the previous week, they remained at levels consistent with a distressed labor market.

(The job picture is creating a lot of job anxiety about the overall economy. Watch the accompanying video for more...)

Analysts polled by Reuters had forecast 537,000 new claims versus a previously reported count of 529,000 the week before.

Continuing claims jumped to 4.087 million in the week ended Nov. 22, the latest data available, from 3.998 million the prior week. Analysts estimated so-called continued claims would be 4.02 million.

The insured unemployment rate, a measure of the workforce receiving unemployment benefits, was 3.1 percent in the week ended Nov 29, rising from 3.0 percent the prior week. This was the highest reading since Sept 1992.

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