Filed by KOSU News in Business.
August 27, 2009

The number of newly laid-off workers filing claims for jobless benefits dropped last week, and the number of people remaining on the rolls also fell, evidence that layoffs have eased. A separate report Thursday showed the economy shrank at an annual rate of 1 percent in the spring, a decrease that was better than expected by private analysts.

Still, both of the jobless claims figures remain above levels associated with a healthy economy, and analysts expect the unemployment rate to keep rising.

The Labor Department said Thursday that first-time unemployment claims fell to a seasonally-adjusted 570,000, down from an upwardly revised figure of 580,000 the previous week. Analysts expected a slightly larger drop to 565,000, according to Thomson Reuters.

The tally of those continuing to claim benefits dropped to 6.13 million from 6.25 million in the previous week, the lowest level since early April. The figures on continuing claims lag initial claims by a week.

Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies’ willingness to hire new workers.

While the figures are volatile, first-time claims have trended downward in recent months. Initial claims topped 600,000 for most of this year, until falling below that level in early July.

The four-week average of claims, which smooths out fluctuations, fell by 4,750 to 566,250 last week. That’s about 90,000 below its peak for the current recession, in early April.

The weekly figures remain far above the roughly 325,000 that analysts say is consistent with a healthy economy. New claims last fell below 300,000 in early 2007.

Economy Shrank 1 Percent In Spring

The Commerce Department’s estimate for the 1.0 percent drop in the gross domestic product was unchanged from the initial figure it released last month. The drop, while representing a record fourth consecutive decline, was far smaller than the previous two quarters. It also was stronger than the 1.5 percent decline that private economists expected.

The new report found that businesses slashed their inventories more than first reported and cut back more sharply on investment in new plants and equipment. But those reductions were offset by revisions that showed smaller dips in consumer spending, exports and housing construction. Copyright 2009 The Associated Press