By CHRISTOPHER S. RUGABER

AP Economics Writer

WASHINGTON (AP) — New claims for jobless benefits fell unexpectedly last week but the number of people continuing to receive government aid reached a 26-year high and large companies announced more job cuts Thursday.

The Labor Department reported that initial claims for unemployment insurance dropped to a seasonally adjusted 509,000, from an upwardly revised figure of 530,000 for the previous week. That was significantly below analysts' estimates of 537,000, according to a survey by Thomson Reuters.

Despite the improved figure, large companies continue to lay off workers. AT&T Inc. said Thursday it is cutting 12,000 jobs, or about 4 percent of its work force, because of the economic downturn. The Dallas-based telecommunications company said the job cuts will take place this month and throughout 2009.

DuPont said it will cut 2,500 jobs, mostly serving the U.S. and European automotive and construction markets, due to lower demand from the steep global decline in homebuilding, auto sales and consumer spending. The Wilmington, Del.-based chemicals maker also will trim 4,000 contractors by the end of this year, with additional reductions expected in 2009.

The economy is struggling as the housing slump and financial crisis has caused consumers and businesses to dramatically cut back on their spending. The National Bureau of Economic Research said Monday that the economy fell into a recession in December 2007.

The number of people continuing to claim unemployment benefits last week reached 4.09 million, the highest level since December 1982, when the economy was emerging from a recession. More workers continuing to claim benefits is an indication that unemployed workers are having a harder time finding new jobs.

The four-week average of initial claims, which smooths out fluctuations, increased to 524,500, also the highest level since December 1982, the department said.

The U.S. work force is roughly 50 percent larger than it was in the early 1980s. As a result, the department said the proportion of workers continuing to receive jobless benefits matches a level reached 16 years ago, in September 1992, when the economy was slowly recovering from recession.

Initial claims last month reached a 16-year high of 543,000. A year ago, initial claims stood at 340,000.

Employers have eliminated jobs every month this year, shedding 1.2 million positions through October. That has sent the unemployment rate to a 14-year high of 6.5 percent. Economists expect the Labor Department will report Friday that the rate increased to 6.8 percent in November and that companies cut another 320,000 jobs.

Large layoffs are occurring across many sectors of the economy. JPMorgan Chase & Co. said this week it will eliminate 9,200 positions at failed thrift Washington Mutual, which it acquired in September.

Jet engine maker Pratt & Whitney, a subsidiary of United Technologies Corp., financial services firm State Street Corp. and mining company Freeport-McMoRan Copper & Gold Inc. also announced layoffs this week.

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