U.S. jobless claims fell more than expected for the second straight week, but the number of Americans continuing to receive unemployment insurance benefits rose above 6 million for the first time.
Analysts expect the labor market to remain weak for the most of this year, as many employers are reluctant to hire until an economic recovery is well under way. And fresh housing data show the slump in that market, a major factor in triggering the recession, is not yet over.
The Labor Department said today that its tally of initial unemployment claims dropped to a seasonally adjusted 610,000 from a revised 663,000 the previous week. That was significantly below analysts’ expectations of 655,000 and the lowest level since late January. The four-week average of claims, which smooths out volatility, fell 8,500, to 651,000.
Initial jobless claims reflect the pace of layoffs by companies and are considered a timely, if volatile, measure of the economy. While declining, they remain much higher than a year ago when claims stood at 369,000.
Finding a new job is difficult for those who have been laid off. The total number of people remaining on the jobless benefit rolls rose 172,000, topping 6 million for the first time. That’s the highest on records dating from 1967. The figures for continuing claims lag initial claims by one week.
Meanwhile, the Commerce Department said construction of new homes and apartments dropped 10.8 percent last month to a seasonally adjusted annual rate of 510,000 units, the second lowest pace on records that go back 50 years.
The decline was worse than economists expected and February activity also was revised lower. Applications for building permits, considered a good barometer of future activity, also fell in March to an annual rate of 513,000 units, lower than the 550,000 economists expected.
The Labor Department also said an additional 2.1 million people were receiving benefits under an extended unemployment compensation program enacted by Congress last year, as of March 28, the latest data available. That provides an additional 20 to 33 weeks on top of the 26 weeks typically provided by the states.
Employers have cut 5.1 million jobs since the recession began in December 2007, as they try to slash costs while consumers and businesses spend less. The department said earlier this month that companies cut a net total of 663,000 jobs in March, sending the unemployment rate to 8.5 percent, the highest in 25 years.
The Federal Reserve expects the unemployment rate will probably “rise more steeply into early next year before flattening out at a high level over the rest of the year,” according to minutes from the central bank’s March meeting released earlier this month. Many private economists expect the rate will hit 10 percent by year’s end.