Fall in jobless claims is largest in 3 months

WASHINGTON - The number of laid-off workers filing claims for unemployment benefits fell last week by the largest amount in three months.

The Labor Department reported that applications for jobless benefits dropped 15,000 last week to a total of 338,000. The decline was the largest since one of 22,000 in the first week of September.

Analysts cautioned against reading too much into the improvement given the volatility in the numbers around holiday periods. Claims had surged the previous week to the highest level since February.

The four-week average for claims continued rising, and hit 340,250, its highest level in two years.

Economists are looking for the labor market to weaken under the impact of a variety of blows to the economy, from a serious downturn in housing to a credit crunch and rising energy prices.

The government is scheduled to release the November employment report today. It is expected to show that the jobless rate edged up to 4.8 percent from 4.7 percent in October.

Overall economic growth is expected to slow to a barely discernible 1.5 percent in the current October-to-December period, and weaken even further in the first quarter of 2008.

Analysts said growth rates this low raised the threat of a possible recession. Federal Reserve officials have noted the slowdown in recent comments, and Wall Street is hoping that the central bank will ride to the rescue with another rate cut Tuesday, when Fed officials are scheduled to meet.

The Fed has already cut rates twice after a severe credit crunch roiled financial markets in August, raising worries that the lack of available loans would further slow an economy already hurt by the worst slump in housing in more than two decades.

The new jobless-claims report showed that, for the week ended Nov. 24, claims applications increased in 25 states and territories and declined in 28.

The biggest increase in claims - 14,126 - occurred in Wisconsin. The decline was attributed to higher layoffs in construction, services, transportation and manufacturing.

The biggest drop in claims - 10,435 - was in California. The improvement was attributed to fewer layoffs in construction and services.