WASHINGTON – New claims for unemployment benefits fell sharply last week, a sign that businesses are feeling more confident in the economic recovery and less inclined to hand out pink slips to workers.
The Labor Department (search) reported Thursday that for the work week ending Dec. 13, new applications for jobless benefits declined by a seasonally adjusted 22,000 to 353,000, the lowest level since Nov. 1. The drop was much larger than economists were expecting.
The report offered a fresh sign that the labor market — after months of struggling — is on the mend.
New claims hit a high this year of 459,000 in the middle of April and have slowly declined, a development cited by Federal Reserve (search) Chairman Alan Greenspan and other economists who say the pace of layoffs is stabilizing.
The more stable four-week moving average of claims, which smooths out week-to-week fluctuations, decreased last week by 2,250 to 361,750. That marked the lowest level since Nov. 22.
The economy grew at a breakneck 8.2 percent annual rate in the third quarter, the best performance in nearly two decades. Analysts believe the economy slowed to a rate of around 4 percent in the current quarter, which would still mark a solid showing.
Even with the economy gaining traction, analysts say that the labor market will be the last piece of the economy to fully heal.
Since President Bush took office in January 2001, the economy has lost 2.3 million jobs, a development that Democrats hope to use against the president as he seeks re-election in 2004. The Bush administration contends that stronger economic growth will eventually lead to more meaningful job creation on a sustained basis.
The nation's unemployment rate dropped to 5.9 percent in November as the economy added jobs for the fourth month in a row. But the number of jobs added last month — 57,000 — was weaker than the 150,000 analysts were forecasting.
Still, economists said they would rather see businesses add to payrolls (search), not cut them as some did in the early and fragile phase of the economic recovery.
Thursday's report also showed that the number of unemployed people collecting jobless benefits for more than a week rose by 28,000 to 3.34 million for the week ending Dec. 6, the most recent period for which that information is available. That suggested that jobs are still hard to find for some workers.
Economists believe that as companies' profits improve they will feel even more comfortable about ramping up investment and beefing up hiring, two crucial ingredients to the recovery's staying power.