The latest government data bolster recent projections from the Federal Reserve and private economists that the nation's job market will remain weak into next year as companies purge thousands more workers.
The Labor Department said Thursday the tally of initial jobless claims fell to a seasonally adjusted 654,000, down from a revised 674,000 the previous week. Analysts expected claims to drop to 660,000.
But the total number of laid-off Americans receiving unemployment rose to 5.84 million, from 5.75 million. That was the most on records dating from 1967 and higher than analysts expected.
The four-week average of claims, which smooths out fluctuations, fell slightly to 657,250, the first drop after 11 straight increases.
Still, the declines are from very high levels. The 674,000 figure was the highest number of initial claims in the current recession and the most in 26 years, though the labor market has grown by half since then.
Initial claims reflect the pace of layoffs by companies and are considered a timely, if volatile, measure of the economy. A year ago, claims stood at 358,000.
The 5.84 million continuing claims lag the initial claims data by a week and doesn't include 1.54 million Americans that received benefits under an extended unemployment compensation program approved by Congress last year. That adds 20 to 33 weeks of benefits on top of the typical 26 weeks provided by states.
The high level of continuing claims is a sign that many laid-off workers are having difficulty finding new jobs.
The Fed expects the unemployment rate - now at a quarter-century high of 8.5 percent - will probably "rise more steeply into early next year before flattening out at a high level over the rest of the year," according to minutes from the central bank's March meeting released Wednesday. Many private economists expect the rate will hit 10 percent by year's end.
The U.S. has lost a net total of 5.1 million jobs since the recession began in December 2007, almost two-thirds of them in the past five months, according to Labor Department data released last week.
Among the states, Kentucky saw the largest jump in claims for the week ending March 28, an increase of more than 5,000 due to layoffs in the auto and manufacturing industries. Michigan, Illinois, Ohio and Tennessee reported the next largest increases.
California had the biggest drop in recipients of more than 7,000, which it said was due to fewer layoffs in the service and manufacturing industries. Pennsylvania, Missouri, Kansas and Minnesota had the next largest drops.
More job losses were announced this week. Pulte Homes Inc. on Wednesday said it's buying Centex Corp. for $1.3 billion in stock in a deal that will create the nation's largest homebuilder and include an unspecified number of job cuts.
Elsewhere, newspaper publisher A.H. Belo Corp., which owns the Dallas Morning News, said it would eliminate 500 positions, or 14 percent of its work force; Goodyear Tire & Rubber said it will cut 5,000 jobs, or about 7 percent of its employees, this year; and equipment maker Deere & Co. said 160 employees at its plant near Des Moines, Iowa, will be laid off later this month due to reduced demand.
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