Jobless claims drop below 400,000 mark

chart_jobless_claims.top.gif By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- For the first time in more than two years, the number of Americans filing for their first week of unemployment benefits fell below 400,000 last week -- a ray of hope in the one of the longest job droughts in U.S. history.

The number of initial claims fell to 388,000 in the week ended Dec. 25, down 34,000 from the week before, the Labor Department said Thursday.

The report marks the first time claims have broken below 400,000 since July 2008 -- two months before the financial crisis peaked with the Lehman Brothers bankruptcy.

"It's impressive to finally see unemployment claims fall below 400,000," said Stuart Hoffman, chief economist with PNC Financial Services, who said that if there were a magic number for unemployment claims, 400,000 would be it.

Though the figure is seasonally adjusted, Hoffman said the data can get distorted around the holiday period, and this week's number included the Christmas holiday.

"We need to see more evidence over the next few weeks, particularly in the early part of 2011, to know that this is a real downside breakout and fewer people are getting laid off," Hoffman said.

While it's just one component of a healthy job market, Hoffman said a downward trend in first-time unemployment claims would be a "major accomplishment."

The 4-week moving average of initial claims -- a number that tries to smooth out week-to-week volatility -- was 414,000, down 12,500 from the previous week.

The weekly number of new claims has been stuck between 400,000 and 500,000 for more than a year after peaking at 651,000 in March 2009.

But during the last month, claims have started to drift toward the lower end of the range.

It's not all good news. Even with the drop in new claimants, more than 4.5 million Americans are still receiving weekly unemployment insurance.

That's because firms have been slow in adding employees to their payrolls, and the second vital component for a strong job market, of course, is an upward trend in hiring.

The number of Americans filing for ongoing claims jumped 57,000 to 4,128,000 in the week ended Dec. 18, the latest data available. Ongoing claims reflect people who file each week after their initial claim until the end of their standard benefits, usually after 26 weeks.

The 4-week moving average for ongoing claims fell to 4,120,000.

The continuing claims figures do not include those who have moved to state or federal extensions, or the roughly 3.5 million people who have exhausted up to 99 weeks of benefits.

The monthly jobless rate has remained above 9% for 19 straight months, the longest stretch on record since the Labor Department started tracking unemployment in 1949.

Though the hiring pace has been sluggish, Hoffman said the outlook for job growth is encouraging.

The Labor Department releases the December jobs report next week, and economists expect the labor market added 111,000 jobs during the month, according to a consensus estimate from Briefing.com. That would be up from a disappointing 39,000 jobs added in November.

Hoffman is even more optimistic, with a forecast of 150,000 job gains during the month. He also expects the November and October figures will be revised higher.

Still, Hoffman said the economy needs to be adding around 250,000 jobs a month consistently to make substantial progres in the overall jobs picture.

"It's going take a while to get the unemployment figures out of the shadows of the high numbers, but we're going to keep moving in the right direction over the coming year," Hoffman said.

He expects the unemployment rate, which currently stands at 9.8%, will tick lower and be closer to 9% by the end of 2011 instead of hovering just below 10%.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,501.65 -12.72 -0.08%
Nasdaq 4,126.97 -34.49 -0.83%
S&P 500 1,875.39 -4.16 -0.22%
Treasuries 2.69 -0.04 -1.47%
Data as of 10:05pm ET
Company Price Change % Change
Facebook Inc 61.36 -1.67 -2.65%
AT&T Inc 34.92 -1.37 -3.78%
Bank of America Corp... 16.37 0.08 0.49%
EMC Corp 25.91 -0.85 -3.18%
Verizon Communicatio... 47.43 -0.49 -1.02%
Data as of 4:01pm ET
Sponsors

Sections

Federal regulators plan to propose new rules Thursday that would allow Internet providers to create a "fast lane" to users for certain websites and services. More

Billionaire advocates for increasing a tax credit on wages as a way to attack the growing inequality in the U.S., but he's unsure of the benefits of raising the federal minimum wage. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

While home values nationwide are still down 13.5% from their pre-housing bust peaks, prices in these major housing markets have recovered -- and then some, according to Zillow. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.