First-time jobless claims drop slightly last week

3/11/2010

WASHINGTON— The number of newly laid-off workers requesting unemployment benefits slipped last week, but remains above the level many economists say would signal new hiring.

The four-week average of claims, which smooths volatility, rose to its highest level since November, reflecting a large jump in claims last month.

“The economy is struggling to finally transition back to sustained job growth,” Abiel Reinhart, an economist at JPMorgan Chase, wrote in a note to clients. The data “continues to indicate that a shift towards robust hiring has not yet arrived.”

The Labor Department said initial jobless claims fell by 6,000 to a seasonally adjusted 462,000. That nearly matches Wall Street analysts' estimates and is the second straight drop.

But initial claims need to fall consistently below 425,000 to signal sustained job creation, economists say. More hiring is critical to provide the income needed to sustain consumer spending and the broader economic recovery.

The latest figures come after other mildly positive news on employment. Job openings rose in January to their highest level in almost a year, the department said on Tuesday. And the unemployment rate was unchanged at 9.7 percent in February, the department said last week, better than analysts expected. The jobless rate hasn't risen since October.

But the economy has a long way to go to repair the damage done by the Great Recession. The nation has lost 8.4 million jobs since the recession began in December 2007. Many economists expect the unemployment rate to remain above 9.5 percent through the end of this year.

The four-week average of claims rose to 475,500, reflecting a sharp increase in claims last month.

The four-week average has risen by about 25,000 since the beginning of the year, after falling for most of last year. The increase has raised concerns among economists that layoffs haven't slowed as much as hoped.

But February's employment report restored some optimism. Employers cut 36,000 jobs, less than analysts expected, and excluding the impact of the snowstorms that hit the East Coast last month, the report likely would have shown job gains, economists said.

Initial claims are considered a gauge of the pace of layoffs and an indication of companies' willingness to hire new workers.

In late December, claims fell to 434,000, their lowest level since July 2008. Claims peaked at 674,000 in the spring.

The department also said Thursday the number of people continuing to claim jobless benefits rose by about 40,000 to 4.56 million. But these so-called continuing claims don't include millions of people who have used up their regular 26 weeks of benefits and are receiving extended benefits for up to 73 more weeks.

Nearly 5.7 million people were receiving extended benefits in the week that ended Feb. 20, down from about 5.9 million the previous week.

Some companies are still cutting workers. Oil producer Chevron Corp. said Tuesday that it will cut about 2,000 jobs this year.

Others are hiring. The consulting firm Accenture PLC has said it plans to hire more than 7,000 people in the United States and about 50,000 worldwide by the end of August.