Jobless claims drop by 58,000
WASHINGTON -- The U.S. Department of Labor reported new unemployment benefits fell by 58,000, the lowest level in three weeks and a suggestion that the wave of layoffs triggered by the recession and the Sept. 11, 2001 terrorist attacks may be drawing to a close.
This improvement came after two weeks of big increases, and came in at about four times the 14,000 decline forecast by many economists.
Analysts said it could be a further sign of a stabilizing labor market after the huge layoffs in the wake of the Sept. 11 terrorist attacks. The government also reported that December unemployment hit a six-year high of 5.8 percent. However, the 124,000 jobs cut from business payrolls during December was sharply down from the two previous months when 800,000 Americans lost their jobs as travel-related businesses laid off thousands. Many economists say the recession, which officially began in March, will end in the first half of this year.
Still, they remain cautious that even after the economy resumes growing, the unemployment rate will continue climbing for a time as businesses hold back hiring until certain of a sustainable recovery.
Analysts are forecasting the jobless rate will peak around 7 percent by late summer. The jobless claims report showed that the four-week moving average for claims, which helps smooth out weekly variations, recently fell to 410,500, the lowest level since the week of Sept. 15. Government analysts cautioned that the drop of 56,000 in claims for the week ending Jan. 5 may have been influenced by a decision by newly laid off workers in California to delay filing for benefits until after Jan. 6, the date a new California law went into effect, raising the maximum weekly benefit to $330, up from $230 in effect last year.
The number of Americans drawing benefits for the week ending Dec. 29 stood at 3.53 million, down by 166,000 from the previous week, another indication that the labor market may be improving with more workers leaving the benefit rolls because they have found jobs.