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Published: Thursday, 5/19/2011

Fewer people sought unemployment benefits for 2nd straight week as job market slowly heals

BY CHRISTOPHER S. RUGABER
AP ECONOMICS WRITER

WASHINGTON — The number of people applying for unemployment benefits fell sharply for the second straight week, suggesting the job market is slowly recovering.

Applications for benefits dropped 29,000 last week to a seasonally adjusted 409,000, the Labor Department said.

The four-week average, a less volatile measure, rose slightly to 439,000. It was the sixth straight increase.

The declines come after applications spiked last month to an eight-month high of 474,000. The increase was largely because of temporary factors. Still, it lifted applications nearly 100,000 higher than February's three-year low of 375,000 — a level typically consistent with sustainable job growth.

Weekly applications peaked during the recession at 659,000.

Economists said they were encouraged to see applications declining again. But many said they would feel more optimistic about the job market when applications fall below 400,000.

"It will likely take several weeks before this average falls back below 400,000 and there is a risk that flooding in the Mississippi area could distort the claims data in the next one or two reports," said John Ryding, an economist at RDQ Economics.

Labor Department analysts said the jump two weeks ago was largely the result of an unexpected increase in layoffs at New York schools. More of the state's school systems closed for spring break than expected. That boosted temporary layoffs among school bus drivers, cafeteria workers and other hourly employees. A new extended benefits program in Oregon also caused applications to rise.

This week, the department said tornadoes that devastated parts of Alabama in late April caused applications in that state to jump by nearly 6,000.

Still, job growth has been strong this year. Businesses have added a net total of more than 250,000 jobs per month, on average, in the past three months. That's the fastest hiring spree in five years. The unemployment rate has dropped nearly a full percentage point in the past five months, though it remains very high at 9 percent.

The total number of people receiving benefits dropped 81,000 to 3.7 million. But that doesn't include millions of people receiving aid under extended programs put in place during the recession. All told, 7.9 million people received benefits during the week of April 30, the latest data available. That's about 50,000 lower than the previous week.



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