WASHINGTON – New claims for unemployment benefits plunged last week by the largest amount in more than a year, offering a dose of encouraging news for a job market that has stayed sluggish this year as companies cope with an uneven economic recovery.
The Labor Department reported Thursday that new claims for jobless benefits fell by a seasonally adjusted 60,000 to 378,000 for the work week ending Dec. 21.
The drop — the largest decline since Oct. 6, 2001 — left claims at their lowest level since Nov. 30.
Still, a Labor Department analyst said that claims can swing widely — in either direction — during the holiday season. Private economists say difficulties adjusting for seasonal factors can distort the weekly claims figures this time of year.
On Wall Street, the Dow Jones industrial average rose 80 points and the Nasdaq index was up 13 points in early afternoon trading.
The more-stable four-week moving average of new claims edged up last week, rising by 2,500 to 404,500, the highest level since the week ending Oct. 19.
For two weeks straight, the four-week moving average has been above the 400,000 mark — a level associated with a lackluster job market. But before that, claims hovered below the 400,000 level for four weeks in a row.
Even with weekly jobless benefit claims figures bouncing around, many economists believe that the worst of the layoffs seen earlier this year are over.
However, economists say even if companies reduce the speed at which they lay off workers, they won't be in a rush to hire. That means the nation's unemployment rate — now at 6 percent — will probably stay in the range for months to come, economists say.
Companies are wary of making big commitments in capital investment and in hiring people, forces that are putting the biggest strain on the economic recovery. Companies are reluctant to make such investments because profits, which took a hit during last year's recession, are still hurting and economic uncertainties, including a possible war with Iraq, complicate planning and business decisions.
The Federal Reserve earlier this month decided to keep a key interest rate at a 41-year low of 1.25 percent. Fed policy-makers hope low rates will motivate businesses to boost investment and keep consumers spending. That would help economic growth.
President Bush wants Congress soon after it convenes next month to extend unemployment benefits for jobless workers. Extended federal aid for the jobless runs out Dec. 28.
Congress last March approved a 13-week extension in federal unemployment benefits. That extension is to run out for people who have exhausted the 26 weeks of payments they typically receive through states.