Jobless claims drop 33,000, U.S. says
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By REX NUTTING MarketWatch - Published: October 11, 2009
WASHINGTON — The number of initial claims filed for state unemployment benefits fell by 33,000 to a seasonally adjusted 521,000 in the week ended Oct. 3, the Labor Department reported Thursday.
It's the fewest initial jobless claims since the first week of January. The four-week average of new claims fell as well, down by 9,000 to 539,750, in what also the lowest since January.
"The level of claims is still far too high, for sure, and it is certainly consistent with further declines in payrolls, but it is heading in the right direction," wrote Ian Shepherdson, chief domestic economist for High Frequency Economics.
Including federal programs, the number of people claiming benefits of any kind in the week ended Sept. 19 was 9.36 million, not seasonally adjusted, down from 9.42 million in the previous week.
"The less-weak reading in the labor market, while welcome, needs to be taken in the context that nearly 10 million people are filing for unemployment benefits," wrote Dan Greenhaus, economic strategist for Miller Tabak & Co.
Economists surveyed by MarketWatch had been looking for first-time claims to fall to about 540,000. The level of initial claims in the week ended Sept. 26 was revised up by 3,000 to 554,000.
The number of people continuing to claim regular state jobless benefits dropped 72,000 to a seasonally adjusted 6.04 million in the Sept. 26 week, the fewest since late March. The insured unemployment rate, representing the proportion of covered workers who are collecting benefits, fell to 4.5 percent from 4.6 percent.
The four-week average of continuing claims stood at 6.14 million, down 16,000.
Because unemployment is so high and so persistent, the federal government has created two programs to provide extended benefits beyond the typical 26 weeks. The number of people collecting the extended federal benefits rose by 68,000 to 3.79 million, a figure that isn't seasonally adjusted.
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.
Most likely, both explanations are in play.
Compared with a year ago, initial claims are up 13 percent, while continuing claims are up 70 percent. 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 August, the exhaustion rate was 52.2 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. More than a third of the 15.1 people classified as unemployed have been out of work longer than six months.
Many of those who exhaust their state benefits are eligible to collect benefits under special federal programs, for a maximum total of 79 weeks. The government doesn't report regularly on the number of people who've exhausted their extended federal benefits. Read more about the federal programs.
A private group has estimated that 400,000 people exhausted their eligibility for extended benefits in September, and it's pegged 1.5 million as the number who will exhaust their extended benefits by the end of the year. The extended benefit program won't take any new claims after the first of the year.
Congress is considering legislation to extend benefits past the new year.
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