U.S. initial jobless claims fall 10,000 to 425,000 in latest week

By Daniel | August 28, 2008

Weekly initial jobless claims fall to 425,000

By Ruth Mantell, MarketWatch

Last Update: 8/28/2008 9:51:00 AM

WASHINGTON (MarketWatch) — The number of new claims filed for state unemployment
benefits fell last week, the Labor Department reported Thursday, as government
data also showed the upward trend in continuing claims reaching the highest level
seen since 2003.

First-time applications for unemployment benefits fell 10,000 to stand at 425,000
in week ended Aug. 23, the government said. The four-week average of those claims
also fell, dropping by 6,000 to 440,250.

For the week ended Aug. 16, continuing claims rose 64,000, reaching 3.42 million
– the most since November 2003. The four-week average of those claims also
reached the highest since November 2003, gaining by 36,250 to 3.37 million.

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.

Economists see readings consistently higher than 350,000 as signaling significant
weakening in the labor market. However, the claims data have been skewed in
recent weeks due to a new federal program that has temporarily boosted the number
of people applying for regular state unemployment benefits. Some of those filing
for the federal program instead found they were eligible for state benefits.

John Ryding and Conrad DeQuadros of RDQ Economics wrote that the claims data
“look like outright recession.”

“The longer this continues, the less plausible the argument that this is a quirk
related to the extension of unemployment benefits,” according to RDQ.

Typically, unemployment benefits run out after 26 weeks for those who are
eligible. The new law extends unemployment benefits for an extra 13 weeks under
the separate federal program.

Benefits are generally available for those who lose their full-time jobs through
no fault of their own. Those who exhaust their unemployment benefits are still
counted as unemployed if they are actively looking for work.

Elsewhere Thursday, the Commerce Department reported that U.S. economic growth in
the second quarter stronger than previously believed, growing at a 3.3% real
annual pace, compared with a prior estimate of 1.9%.

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