Initial Jobless Claims Fall More Than Expected

Washington, DC, Dec. 31, 2008--Initial jobless claims fell 94,000 last week, government data on Wednesday showed, but seasonal factors were likely behind this unexpectedly large decline with the labor market remaining very soft.

Initial claims for state unemployment insurance benefits fell to a seasonally adjusted 492,000 in the week ended Dec. 27 from an unrevised 586,000 the prior week, the Labor Department said. It was the lowest reading for initial claims since the week ended Nov. 1, and the steepest decline since 1992.

Analysts had forecast 565,000 new claims as the country's year-long recession continued to chill employment, and a separate reading on so-called continued claims hit a 26-year high.

A Labor Department official said the timing of the year-end holidays and volatility in factors used to seasonal adjust the data was likely to blame for the large decline in initial weekly claims, and he warned this situation could persist for several more weeks.

"The numbers seemed unbelievable but the states certified they were correct," the Labor Department official said.

The official said all but two states and one territory reported actual numbers of claims, rather than submitting an estimate. But the fact many staff at claims offices were likely away for the Christmas vacation may have depressed the number of applications for aid that were actually processed, he said.

The four-week average of new jobless claims dropped to 552,250 from 558,000 the week before.