New jobless claims decline, but miss expectations

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By Chritopher S. Rugaber

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.