New Jobless Claims Drop to 470,000

WASHINGTON (AP) - The number of newly laid-off workers claiming
unemployment benefits fell less than expected last week, fresh
evidence the job market remains a weak spot in the economic
recovery.

The Labor Department said Thursday that first-time jobless
claims dropped by 8,000 to a seasonally adjusted 470,000. Analysts
had expected a steeper drop to 450,000, according to Thomson
Reuters.

The four week average, which smooths out volatility, rose for
the second straight week to 456,250. The average had fallen for 19
straight weeks before starting to rise. That decline had given some
analysts hope the economy would soon generate net job gains.

Two weeks ago, claims surged by 34,000 due to administrative
backlogs left over from the holidays in the state agencies that
process the claims, a Labor Department analyst said. Those delays
may still be affecting the data, the analyst said.

That means the current figures could be artificially inflated.
At the same time, it would also mean that the steep drop in claims
in late December and early January was also exaggerated by the
backlogs.

Economists closely watch initial claims, which are considered a
gauge of the pace of layoffs and an indication of companies'
willingness to hire new workers.

Claims have dropped since last fall, as companies cut fewer
jobs. In late December, initial claims fell to their lowest level
since July 2008, before the financial crisis intensified that
September.

Despite the downward trend over the winter, the economy is not
yet consistently generating net increases in jobs. The Labor
Department said earlier this month that employers cut 85,000 jobs
in December, after adding 4,000 in November. November's small
increase was the first in nearly two years. The unemployment rate
was unchanged at 10 percent.

The number of people continuing to claim benefits, meanwhile,
dropped by 57,000 to 4.6 million. Those figures lag initial claims
by a week.

But the so-called continuing claims do not include millions of
people who have used up the regular 26 weeks of benefits typically
provided by states, and are receiving extended benefits for up to
73 additional weeks, paid for by the federal government.

More than 5.6 million people were receiving extended benefits in
the week ended Jan. 9, the latest data available. That's about
300,000 fewer than the previous week. All told, more than 10
million people are receiving unemployment assistance.

Some employers are continuing to cut jobs. Home Depot Inc. said
Tuesday that it will lay off 1,000 employees. And Wal-Mart Stores
Inc. said it will cut 11,200 jobs in its Sam's Club stores as it
outsources product demonstrations.

Among the states, California saw the largest increase in claims,
with 43,748, which it attributed to clearing a backlog in claims.
Florida, West Virginia and Iowa also reported increases. The state
data lags initial claims by one week.

Pennsylvania saw the biggest drop in claims, a drop of 25,819,
followed by New York, North Carolina, Wisconsin and Georgia.

(Copyright 2010 by The Associated Press. All Rights Reserved.)