Unemployment Picture Improves

The number of new people signing up for unemployment benefits dropped last week, a hopeful sign that the recovery in the jobs market is moving ahead.

The Labor Department reported Thursday that new applications filed for jobless benefits declined by a seasonally adjusted 5,000 to 326,000 for the week ending Dec. 25. That left claims at their lowest level since the week ending Dec. 11.

Economists surveyed by CBS MarketWatch had been expecting, on average, that initial claims last week would be steady at about 333,000.

"The underlying trend remains much the same as it has been since the spring," said Marisa DiNatale, an economist for Economy.com. "The labor market is improving."

Strengthening job creation has been an important task for President Bush. The still-recovering job market has been seized upon by Democrats who contend the president's economic policies have failed to induce a steady hiring spree by businesses.

Employers added 112,000 jobs in November, down from 303,000 in October. Economists, however, are hoping for an improvement in December's payrolls and are forecasting the addition of around 175,000 jobs during the month. The jobless rate is expected to hold steady at 5.4 percent. The employment report for December will be released by the government next week.

Meanwhile, the U.S. help-wanted index dipped a point to 36 in November, matching a four-decade low, the Conference Board said Thursday. Help-wanted advertising in major U.S. daily newspapers has declined in six of the nine U.S. regions in the past three months.

"Job growth continues to be sluggish," said board economist Ken Goldstein. However, Morgan Stanley economist David Greenlaw told CBS MarketWatch the index "does not appear to be providing any useful information" about the labor market at this time.

The Federal Reserve, wanting to keep inflation at bay, boosted short-term interest rates for a fifth time this year on Dec. 14. Fed policy-makers at that meeting struck an encouraging tone about economic activity and said that "labor market conditions continue to improve gradually."

Thursday's report also showed that the four-week moving average of claims, which smoothes out week-to-week fluctuations, fell by 6,000 last week to 333,500, the lowest level since the week ending Nov. 20.

The number of people continuing to collect jobless benefits, however, rose by 29,000 to 2.76 million for the week ending Dec. 18, the most recent period for which that information is available. Still, looking over the past year, this figure has clearly improved. A year ago, people continuing to draw unemployment benefits stood at 3.32 million.