Jobless claims in surprise decline
But continuing claims rise to a 26-year high as weakness in employment picture persists.
NEW YORK (CNNMoney.com) -- The number of Americans filing new unemployment insurance claims decreased last week, but the number of people continuing to collect benefits hit a 26-year high.
The Labor Department reported Thursday that initial filings for state jobless benefits decreased by 21,000 to 509,000 for the week ended Nov. 29. That was down from a revised 530,000 claims in the prior week.
Economists were expecting jobless claims to increase to 540,000, according to a consensus compiled by Briefing.com.
One economist attributed the drop in claims to the Thanksgiving holiday that fell during the week data was collected, although the report's figures are seasonally adjusted. Ian Shepherdson of High Frequency Economics called the dip in claims "a pleasant surprise," but expects more people to seek benefits.
"The underlying trend in claims remains strongly upwards, and we expect a rebound," Shepherdson said in a statement. "Companies are seeking to make more, not fewer, layoffs at this point."
Even with fewer claims being filed, the number of people continuing to collect unemployment insurance for a week or longer rose to a 26-year high. The figure increased by 89,000 to 4.09 million for the week ended Nov. 22, the latest week available. The last time the figure was this high was December 1982, when claims reached 4.38 million.
The four-week moving average of jobless claims, used to smooth out fluctuations in data, spiked this week to a 26-year high. The average rose 6,250 to 524,500, the highest since December 1982, when it reached 533,000.
This week's report marks the fifth time since 1992 that initial claims have exceeded the half-million mark. Since the start of the recession, jobless claims have increased by nearly 50%. The deteriorating labor market was a key reason why a group of private economists determined earlier this week that the recession began last December.
On Nov. 21, the same day initial claims spiked to a 16-year high, President Bush signed legislation to extend benefits by at least seven weeks in every state, and by 13 weeks in states with unemployment rates of at least 6%. In most instances, unemployment benefits last for 26 weeks.
Economists expect the Labor Department's monthly employment report to show 325,000 jobs lost in November when it is released Friday. If that's accurate, it would represent the largest monthly drop in non-farm employment in seven years.
So far this year, the economy has lost nearly 1.2 million jobs so far this year, including 240,000 in October. The unemployment rate rose to 6.5%, a 14-year high, last month. That rate is expected to rise to 7.6% in 2009, according to a report released last week from the Federal Reserve.