The number of people filing initial claims for state unemployment benefits fell by 20,000 to a seasonally adjusted 512,000 in the week that ended Oct. 31, the Labor Department reported Thursday.
It was the first decline in two weeks. It’s the fewest initial claims since early January. Initial jobless claims have been above 500,000 for 51 straight weeks.
The news was mixed, said Jennifer Lee, an economist for BMO Capital Markets. The decline in initial claims was “clearly good news,” but her enthusiasm was tempered by a rise in recipients of extended federal benefits.
The figures come one day before the Labor Department reports on the October employment rate. Economists surveyed by MarketWatch expect nonfarm payrolls to fall by 150,000 in October, and for the unemployment rate to rise to 9.9 percent.
“If the pace of decline from the peak is maintained, we are still some five months away from claims reaching the level that will signal net job growth,” wrote economists for RDQ Economics.
Economists surveyed by MarketWatch expected initial claims to fall to about 520,000. The level of initial claims in the week that ended Oct. 24 was revised up by 2,000 to 532,000.
The four-week average of initial claims fell by 3,000 to 523,750, also the lowest since January. The four-week average smoothes out quirks due to one-time events, such as bad weather, holidays or strikes.
Continuing state claims fell by 68,000 to a seasonally adjusted 5.75 million, the lowest since March. The insured unemployment rate (the proportion of covered workers who are collecting state benefits) was unchanged at 4.4 percent.
Compared with a year ago, initial claims are up 9 percent, while continuing claims are up 55 percent.
Because unemployment is so high and so persistent, the federal government has created programs to provide extended benefits beyond the typical 26 weeks. The number of people collecting extended federal benefits rose by 117,000 to 4.08 million, not seasonally adjusted.
Including those federal programs, the number of people claiming benefits of any kind in the week ending Oct. 17 was 9.53 million, not seasonally adjusted, up 136,000 from 9.36 million in the previous week.
The Senate approved legislation on Wednesday to extend benefits for up to 20 additional weeks in the hardest-hit states, for a maximum of 99 weeks.
In a separate report, the Labor Department said productivity in the U.S. nonfarm sector rose at a 9.5 percent annual rate in the third quarter, the biggest gain in six years. Unit labor costs plunged 5.2 percent. In the past year, productivity is up 4.3 percent, while unit labor costs are down a record 3.6 percent.
The decline in continuing state claims in the past few months could show that companies are more willing to hire, or it could mean that more people were exhausting their benefits and moving into the extended federal benefits program, which is reported separately. Typically, people are eligible for 26 weeks of regular state unemployment benefits.
Initial claims represent job destruction, while the level of continuing claims indicates how hard or easy it is for displaced workers to find new jobs. The jobless claims report shows businesses are still laying off workers at a rapid rate, and finding a replacement job is extremely difficult for those who’ve lost work. The unemployment rate rose to a 26-year high of 9.8 percent in September.
Benefits are generally available for those who lose their full-time job through no fault of their own. Those who exhaust their unemployment benefits are still counted as unemployed if they are actively looking for work.
More than half of those collecting state benefits ultimately exhaust their regular state benefits before finding work, usually after receiving checks for 26 weeks. In September, the exhaustion rate was 52.4 percent, the highest on record dating back to 1972.
In September, a record 5.4 million people had been unemployed for longer than six months, according to the separate household survey of employment.
Many of those who exhaust their state benefits are eligible to collect under special federal programs, for a maximum total of 79 weeks. Because of the way the program is set up administratively, the government does not report regularly on the number of people who’ve exhausted their extended federal benefits.
A private advocacy group has estimated that 1.5 million people will exhaust their extended benefits by the end of the year.
(c) 2009, MarketWatch.com Inc. Source: McClatchy-Tribune Information Services.
