New jobless claims unexpectedly drop to 631K
WASHINGTON (AP) ó The number of newly laid-off workers signing up for unemployment benefits dropped unexpectedly last week, while people continuing to draw aid topped 6.3 million, setting a record for the 13th straight week.
The Labor Department said Thursday that new applications for unemployment insurance fell to a seasonally adjusted 631,000 last week. That was down from the prior week’s 645,000, which was revised slightly higher from the government’s initial estimate.
Economists expected a small increase in new claims.
The number of people continuing to draw unemployment benefits jumped to 6.3 million, the highest on records dating back to 1967 and steeper than economists expected.
New filings ó as opposed to those who remain on the unemployment compensation rolls ó are closely tracked by economists for clues about the future direction of the economy. Analysts want to see a sustained decline in new applications as a sign of improved conditions.
Although last week’s drop in new jobless filings was welcome, the level of claims remains elevated and signals a troubled jobs market. The labor market usually doesn’t recover until well after a recession has ended. That’s because companies won’t want to ramp up hiring until they feel certain any recovery has staying power.
The record number of continued claims suggests that many laid-off workers are having trouble finding new jobs.
As a proportion of the work force, the total jobless benefit rolls are the highest since late December 1982. The continuing claims data lag initial claims data by a week.
Besides the continued claims, the report said there were 2.4 million people receiving benefits, as of April 11, under an extended unemployment compensation program enacted by Congress last year. That provides an additional 20 to 33 weeks on top of the 26 weeks typically provided by states.
Workers and companies have been hard hit by the recession, which began in December 2007. It has snatched 5.1 million jobs and pushed the unemployment rate to a quarter-century high of 8.5 percent. It is expected to top 10 percent by early next year before it starts to slowly drift downward.
Companies have laid off workers and resorted to other cost-saving measures to survive the recession, which has eaten into sales and profits.
Many analysts predict the recession is easing in the current quarter.
The economy is still expected to shrink from April to June, but not nearly as much as it has been. In the first quarter of this year, the economy tumbled at an annualized 6.1 percent drop. That followed a 6.3 percent annualized decline in the final quarter of last year.
Another report showed that the recession is making employers more frugal when it comes to workers’ compensation packages. U.S. workers’ wages and benefits inched up just 0.3 percent in the first quarter of this year, the smallest gain on records dating back to 1982, the department said.