Jobless claims fall from 7-year high
First-time filings for unemployment insurance decline, but remain higher than expected.
NEW YORK (CNNMoney.com) -- The number of out-of-work Americans filing new claims for unemployment insurance last week edged off a seven-year high but was higher than economists' estimates, according to a government report released Thursday.
The U.S. Department of Labor reported that initial filings for state jobless benefits decreased by 20,000 to a seasonally adjusted 478,000 in the week ended Oct. 4.
Economists surveyed by Briefing.com expected the number to decline to 475,000. For the week ended Sept. 27, unemployment claims spiked to an upwardly revised 498,000. That week, jobless claims were the highest recorded since the 517,000 claims filed in the wake of the Sept. 11 terrorist attacks.
The Labor Department attributed about 17,000 of the new claims to the lingering effects of Hurricanes Gustav and Ike. That helped increase the seasonally adjusted four-week moving average by 8,250 to 482,500 from 474,250 the week prior. That compares with 317,000 in the year-earlier period.
The four-week moving average tends to smooth fluctuations in the data. A level at or above 400,000 for the four-week average was present throughout the last two recessions.
Bob Brusca, an economist at FAO Economists said that if jobless claims related to the hurricanes were not factored in, claims figures would have moved higher.
"The underlying economy is getting worse," he said, adding that economic indicators will likely become "uncomfortably worse."
"You don't have to be an economist to know that the labor market is getting worse, the economy is getting worse, and jobless claims are going to rise," Brusca said.
He noted the jump in unemployment filings in Texas was not just hurricane related but due in part to losses in the finance, real estate and insurance market. "People are getting fired, and things are getting worse there."
The number of Americans workers collecting benefits for more than one week has jumped by 56,000 to 3,659,000 - the highest level in more than five years. The 4-week moving average jumped 31,750 to 3,563,250 from the preceding week.
Last week, the Labor Department reported that the U.S. economy lost 159,000 jobs in September, the ninth straight month of losses in a year that has seen 760,000 jobs disappear so far. In September, the unemployment rate remained unchanged from the month prior at 6.1%.
The nation is battling a financial crisis that has resulted in bank failures, a lending freeze to businesses and steep drops in the stock market. On Thursday, the Bush administration is considering taking ownership stakes in certain U.S. banks to further combat the crisis, according to media reports. Last Friday, Congress approved the $700 billion bank bailout, allowing the Treasury to buy bad debt directly from banks.