- The Washington Times - Friday, July 31, 2009

First-time claims for unemployment benefits increased last week, but the four-week moving average declined slightly, suggesting that while jobless claims may be peaking, recovery in the labor market remains distant.

The Labor Department reported Thursday that initial claims jumped 25,000 to 584,000 for the week ending July 25. The four-week moving average, which reduces the week-to-week volatility in the jobless numbers, fell 8,250 to 559,000, the lowest level since Jan. 24.

The states with the largest increases in initial jobless claims last week were California (4,290), Michigan (3,654) and Florida (3,291).

“Although initial claims for unemployment benefits bounced higher, the news is generally consistent with easing labor market contraction,” said Andrew Gledhill, an economist at Moody’s Economy.com.

For the week ending July 18, the number of continuing claims for unemployment benefits declined by 54,000 to 6.2 million, the lowest level since April 11. Continuing claims peaked at 6.9 million a month ago.

However, as the economic downturn deepened, as layoffs soared and as the recession evolved into the longest postwar contraction, continuing jobless claims were no longer the best indicator of the number of benefit recipients.

Jobless workers whose regular unemployment benefits expire after the normal 26-week limit for state programs can apply for supplemental jobless payments through two federal programs — extended benefits and Emergency Unemployment Compensation (EUC).

For the week ending July 11, the number of workers receiving extended benefits dropped by 37,000, falling to 352,000, the Labor Department reported. A year ago, fewer than 2,000 people collected extended benefits.

Workers collecting EUC benefits increased by 24,518 to a total of 2.66 million. A year ago, only about 127,000 workers were collecting EUC benefits.

Altogether, nearly 10 million people were collecting jobless benefits for the week ending July 11. Since the recession began in December 2007, the economy has shed 6.5 million jobs.

“Even including those filing for supplemental benefits, the total number of people collecting unemployment appears to be peaking and perhaps even falling slightly,” Mr. Gledhill said. “However, the road to labor market health will be long.”

Moody’s Economy.com forecasts that the labor market will continue to deteriorate into the middle of next year and then improve only gradually, Mr. Gledhill said.

The Federal Reserve’s latest forecast projects that today’s unemployment rate of 9.5 percent will peak near 10 percent in the fourth quarter and remain at or above 9.5 percent a year later.

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