Associated Press
Jobless Claims Fall to 21-Month Low
Thursday December 5, 8:39 am ET
By Jeannine Aversa, Associated Press Writer
Jobless Claims Fall to Lowest Level Since Feb. 17, 2001,
Better Than Analysts' Expectations
WASHINGTON (AP) -- New claims for unemployment benefits plunged last week to their lowest level in 21 months, offering some cheer to workers as they head into the holiday shopping season.
The Labor Department reported Thursday that new applications for unemployment insurance fell by a seasonally adjusted 13,000 to 355,000, for the work week ending Nov. 30. The decline left claims at their lowest point since the week ending Feb. 17, 2001.
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It marked the third week in a row that new claims for jobless benefits went down, good news for workers who have been feeling the strain of the uneven economic recovery for much of this year.
The latest snapshot of the labor market was much better than analysts were expecting. They were forecasting a rise in new claims.
While the Thanksgiving Day holiday -- in which unemployment offices were closed -- may have played a role in the decline of new claims last week, economists have noted that claims recently have been drifting lower, a positive sign.
In fact, the more stable four-week moving average of new claims, which smooths out week-to-week fluctuations, dropped to 376,500 last week, the lowest level since the week ending March 3, 2001.
Both the four-week moving average and initial claims have been below the 400,000 mark -- a level associated with an extremely weak job market -- for three straight weeks.
Thursday's report showing that layoffs are stabilizing may also bode well for consumer spending in the holiday shopping season.
Consumer spending accounts for two-thirds of all economic activity in the United States and has been the main force keeping the economy going all year.
Low mortgage rates, tax cuts, and extra cash coming from a refinancing boom have helped to support consumer spending this year, offsetting some negative factors including the roller-coaster stock market and the uncertain economic environment.
Even as layoffs slow, economists are not expecting companies to go on a hiring spree. Many economists believe companies, in the face of the struggling recovery and economic uncertainties, will keep their work forces relatively lean.
Economists believe around 35,000 jobs were added to the economy in November, an improvement from October's job cuts.
However, economists are still forecasting a rise in the nation's unemployment rate in November to 5.8 percent from October's 5.7 percent rate. The government will release the employment report for November on Friday.
The economic recovery has been advancing this year, but in fits and starts, an environment that has made businesses wary about making big commitments in hiring and in capital investment. Fears about a war with Iraq, the turbulent stock market and other economic uncertainties have weighed heavily on companies and made workers who still have jobs anxious about keeping them.
But in another hopeful sign in the jobless claims report, the number of unemployed people who are continuing to collect unemployment benefits dropped to a four-month low of 3.49 million for the work week ending Nov. 23, the most recent period for which the information is available. A decline in that number suggests more hiring is going on.
Wanting to energize the economic recovery, the Federal Reserve last month cut a key interest rate by a bold half a percentage point to a 41-year low of 1.25 percent. It marked the first rate reduction of this year and the 12th since January 2001. Analysts believe the Fed will hold rates at that low level at its meeting next Tuesday.
Jobless claims: www.doleta.gov/