New jobless claims drop more than expected

WASHINGTON – December 18, 2008 The Labor Department reported Thursday that new applications for jobless benefits fell to a seasonally adjusted 554,000 for the week ending Dec. 13, from an upwardly revised figure of 575,000 the previous week. The new tally was slightly below economists' expectations of 558,000 claims.

One likely reason for the improvement is that the figure was inflated two weeks ago by applicants who delayed filing their claims during the Thanksgiving holiday week, a Labor Department analyst said. The government attempts to account for such volatility with its seasonal adjustments but is not always successful.

Still, the four-week moving average, which smooths out fluctuations, increased slightly to 543,750 claims, the highest since December 1982. The labor force has grown by about half since then.

Another slight improvement was seen in the number of people who continue to receive jobless benefits, which declined to 4.38 million from 4.43 million the previous week. Economists expected a slight increase to 4.45 million.

Economists consider jobless claims a timely, if volatile, indicator of the health of the labor markets and broader economy. A year ago, initial claims stood at 349,000.

The elevated level of claims is just one of several signs that the labor market has deteriorated rapidly in recent months.

Large layoffs are occurring across many sectors of the economy. On Wednesday alone, hard drive maker Western Digital Corp., managed-care company Aetna Inc., and Newell Rubbermaid Inc., maker of products including Rubbermaid storage containers and Sharpie pens, announced mass job cuts.

Pharmaceutical company Bristol-Myers Squibb Co., International Paper Co. and Bank of America Corp. also announced layoffs in the past week.

"The continuing wave of layoffs suggests claims could soon top 600,000," David Resler, chief economist at Nomura Securities, wrote in a client note Wednesday.

The Labor Department said earlier this month that employers cut a net total of 533,000 jobs in November, sending the unemployment rate to 6.7 percent, the highest in 15 years.

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