Mixed News On Unemployment

The number of Americans seeking initial unemployment benefits fell last week, the government said Thursday, even as more people kept drawing benefits, pushing that figure to its highest in 19 years.

It was the second straight week of fewer claims, suggesting the economic recovery in the United States is motivating some companies to lay off fewer workers.

The Labor Department said the number of first-time jobless claims — a guide to the strength of the job market and the pace of layoffs — fell for the second straight week, falling to 410,000 for the week ended May 25 from a revised 422,000 the week before.

The more stable four-week moving average of new claims, which smoothes out weekly fluctuations, also fell last week to 418,500.

The number of new claims was in line with the expectations of private economists polled by Reuters who forecast a fall to 409,000. Labor had originally reported claims at 416,000 for the May 18 week.

Although fewer Americans filed new applications, the level of claims continues to be high, a sign that the jobs market remains sluggish.

Also, in an indication that more unemployed people are staying jobless, the number of people who had already qualified for a week of benefits rose to 3.89 million in the week ended May 18, the latest week for which figures are available.

The rise in so-called continued claims — the fifth straight increase — was from 3.84 million the previous week and the highest since 3.95 million in the Jan. 15, 1983 week when President Reagan was in the midst of his first term.

That suggests that laid-off workers are still having trouble finding a job.

The number of new claims extended its streak above the key 400,000 mark, which is seen by economists as a sign of a soft labor market, to ten consecutive weeks, the longest string since 17 weeks running from Aug. 18 through Dec. 8, 2001.

Many economists predict the unemployment rate will rise as high as 6.5 percent by June.

Companies — whose revenues and profits took a hit during the slump — are worried about the recovery's staying power and are reluctant to quickly hire back workers, crank up spending and make other big commitments until they are convinced the turnaround is for real, economists said.

In the week ended May 18, the latest week for which state-by-state figures are available, the department said four states reported a decrease in claims exceeding 1,000, led by California with 4,507 fewer claims.

That state reported fewer layoffs in the construction and wholesale trade industries, and in agriculture.

In the same week, three states reported an increase in claims of 1,000 or more led by Pennsylvania with 1,988 additional claims with more layoffs in the food, primary metals and trade industries.