Unemployment claims drop

NEW YORK (CNNMoney.com) -- The number of Americans filing for initial unemployment insurance fell last week, the government said Thursday.

There were 470,000 initial job claims filed in the week ended Jan. 23, down 8,000 from a revised 478,000 the previous week, the Labor Department said in a weekly report.

A consensus estimate of economists surveyed by Briefing.com expected new claims to fall to 450,000.

The 4-week moving average of initial claims was 456,250, up 9,500 from the previous week's revised average of 446,750.

"It was good news to see it move lower," said John Lonski, a chief economist at Moody's Economy.com. "Nonetheless, the 4-week moving average did rise for a second consecutive week and this warns of a possible softening of the labor market."

Continuing claims: The government said 4,602,000 people filed continuing claims in the week ended Jan. 16, the most recent data available. That's down 57,000 from the preceding week's revised 4,659,000 claims.

The 4-week moving average for ongoing claims fell by 94,250 to 4,669,250 from the previous week's revised 4,763,500.

But the drop may just mean that more filers are dropping off those rolls into extended benefits.

Continuing claims reflect people filing each week after their initial claim until the end of their standard benefits, which usually last 26 weeks. The figures do not include those people who have moved to state or federal extensions, or people whose benefits have expired.

In November, Congress passed a record-long extension of federally paid benefits up to 99 weeks. But the law only helps those who have used up their first 26 weeks of benefits by the end of 2009, so depending on the state, not everyone will receive benefits for the entire 99-week span.

The House and the Senate passed measures in December to extend the filing deadline through the end of February.

Lawmakers in both chambers had initially introduced bills to push the deadline to apply for benefits as far back as 2011, but House Democratic leaders compromised the effort in order to speed up the process of getting the bill through the Senate.

State-by-state: Unemployment claims in 5 states dropped more than 1,000 for the week ended Jan. 16, the most recent data available. Claims in Pennsylvania fell the most, by 25,819, which the state attributed to fewer layoffs in the construction, service and transportation industries.

A total of three states said the claims rose by more than 1,000. Claims in California jumped the most, by 43,748, which the state said was due to the state clearing its claims backlog.

Outlook: "The latest news on jobless claims offers no news for celebration," said Lonski. "They are down from the previous week, yet this metric of labor market conditions leaves a lot to be desired."

Until the 4-week moving average falls below 400,000, job growth will not be sustained, said Lonski.

"We have to be prepared for continued loss of jobs at a rate that is much less severe," he said.

Lonski expects that there will be fewer unemployment claims in the month of January, partly due to seasonal factors.

"January's payroll will get a special boost from the fact that the seasonally adjusted loss of jobs in retailers will be less than otherwise, mostly because retailers didn't hire as many people as they normally would," he said. "So if we get a gain in payrolls, it may owe something to the magic or peculiarities of seasonal adjustment."

But unless consumer spending picks up next month, he said he expects another rise in unemployment claims for the month of February, and job growth may not begin to stabilize until "well into the spring."