Jobless claims decline, but not enough

NEW YORK (CNNMoney.com) -- The number of first-time filers for unemployment insurance fell for a second straight week last week, but the level suggests that the labor market remains sluggish.

There were 472,000 initial jobless claims filed in the week ended Aug. 28, down 6,000 from an upwardly revised 478,000 the previous week, according to the Labor Department's weekly report.

Economists surveyed by Briefing.com were expecting 475,000 new claims.

The 4-week moving average of initial claims -- a number that tries to smooth out week-to-week volatility -- was 485,500, down 2,500 from the previous week.

Claims have been stuck in the mid- to upper-400,000 range for about nine months, though last month they spiked above 500,000 for the first time since November, before edging lower again.

"This report is a step in the right direction, but this range is not where we want to stay," said Robert Dye, senior economist at PNC Financial Services. "Labor market conditions are stabilizing, but we're not generating as many jobs as we would like to since economic activity has stalled."

Last week, the government said the economy sputtered to a near stop in the second quarter, growing at an annual rate of 1.6% during the period.

Dye expects economic growth to remain stagnant during the third quarter, but begin to pick up toward the end of the year and into 2011.

Continuing claims: The government said 4.456 million people continued to file unemployment claims for their second week or more, during the week ended Aug. 21, the most recent data available. That's down 23,000 from an upwardly revised 4.479 million the week before.

The 4-week moving average for ongoing claims fell by 28,500 to 4.485 million.

Continuing claims reflect people who file each week after their initial claim until the end of their standard benefits, which usually last 26 weeks. The figures do not include those who have moved to state or federal extensions, or people who have exhausted their benefits but are still out of a job.

State-by-state: Jobless claims in seven states declined by more than 1,000 in the week ended Aug. 21, which is the most recent state data available. Claims in California dropped the most, by 5,893. The state attributed the drop to fewer layoffs in the service industry.

Claims jumped by more than 1,000 in Florida, due to layoffs in the construction, trade and service industries.