New jobless claims rise unexpectedly

The number of newly laid off workers filing claims for unemployment benefits unexpectedly rose last week as the recovery
of the nation’s battered labor market proceeds in fits and starts.

The Labor Department said Thursday that the
number of new jobless claims rose to 480,000 last week, up 7,000 from the previous week. That was a worse performance than
the decline to 465,000 that economists had expected.

The four-week average for claims, which smooths out fluctuations,
did fall, dipping to 467,500, the 15th straight decline, viewed as an encouraging sign that the labor market is gradually
improving. The four-week average is now at its lowest point since late September 2008, the period when the financial crisis
was hitting with full force.

Unemployment claims have been on a downward trend since this summer. That improvement
is seen as a sign that jobs cuts are slowing and hiring could pick up as soon as early next year. But the rise in weekly claims
of 7,000 last week, which had followed an increase of 19,000 the previous week, shows that the improvement has been halting.

Economists closely monitor jobless claims, which are considered a key gauge of the pace of layoffs with continuing
claims viewed as an indication of how quickly laid off workers are getting new jobs.

Analysts believe that claims
need to fall to about 425,000 for several weeks to signal the economy is actually beginning to add jobs.

The government
said that the number of people receiving regular benefits rose by 5,000 to 5.19 million for the week ending Dec. 5. That figure
does not include millions of people who have used up the regular 26 weeks of benefits typically provided by the state and
are now receiving extended benefits for up to 73 additional weeks, paid for by the federal government.

The people
receiving extended benefits jumped to 4.73 million for the week ending Nov. 28, an increase of 143,759 from the previous week.
That big rise reflected the fact that a total of 17 states are now processing claims for the extension of benefits that Congress
approved last month.

The economy grew at a 2.8-percent annual rate in the July-September quarter, the first growth
in the gross domestic product after a record four straight quarters of shrinking GDP. A recent string of more positive reports
is causing some analysts to revise higher their forecasts for growth in the current quarter to 3 percent or slightly better.

However, the concern is that unless unemployment starts to come down in a sustained way, consumer spending, which
accounts for 70 percent of economic activity, will begin to falter, putting in jeopardy the fragile recovery from the nation’s
longest recession since the 1930s.

The jobless rate did dip in November to 10 percent, down from a 26-year high
of 10.2 percent in October. But analysts are worried that unemployment will resume rising in coming months and will not peak
until hitting 10.5 percent next summer. However, the November jobless report did show that businesses slashed their payrolls
by just 11,000 jobs on net in November, the smallest decrease since the recession began two years ago.

Reserve officials on Wednesday concluded their final meeting of the year with a decision to hold interest rates at "exceptionally
low levels" for an extended period. The Fed has kept its key federal funds rate at a record low near zero percent for
the past year and many economists don’t look for any increases until the unemployment rate begins to move lower on a consistent

In its assessment of the economy, Fed officials noted that economic activity was continuing to pick up and
the pace of layoffs has been slowing.

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