New unemployment claims off, but market is still weak

WASHINGTON - New jobless claims fell more than expected last week but are stuck at elevated levels, while the number of people continuing to receive unemployment insurance approached six million, setting a record for the 10th straight week.

The government data released yesterday bolster recent projections from the Federal Reserve and private economists that the nation's job market will remain weak into next year as companies purge thousands more workers.

The Labor Department said the tally of initial jobless claims fell to a seasonally adjusted 654,000, down from a revised 674,000 the previous week. Analysts expected claims to drop to 660,000.

But the total number of laid-off Americans receiving unemployment rose to 5.84 million, from 5.75 million. That was the most on record dating from 1967 and higher than analysts expected.

The four-week average of jobless claims, which smooths out fluctuations, fell slightly to 657,250, the first drop after 11 straight increases, according to the Labor Department.

Initial claims reflect the pace of layoffs by companies and are considered a timely, if volatile, measure of the economy. A year ago, claims stood at 358,000.

The 5.84 million continuing claims lag the initial claims data by a week and didn't include 1.54 million Americans that received benefits under an extended unemployment compensation program approved by Congress last year. That adds 20 to 33 weeks of benefits on top of the typical 26 weeks.

The high level of continuing claims is a sign that many laid-off workers are having difficulty finding new jobs.

The Fed expects the unemployment rate - now at a quarter-century high of 8.5 percent - will probably "rise more steeply into early next year before flattening out at a high level over the rest of the year," according to minutes from the Fed's March meeting released Wednesday. Many private economists expect the rate will hit 10 percent by year's end.

More job losses were announced this week. Pulte Homes Inc. on Wednesday said it's buying Centex Corp. for $1.3 billion in stock in a deal that will create the nation's largest homebuilder and include an unspecified number of job cuts.

Elsewhere, newspaper publisher A.H. Belo Corp., which owns the Dallas Morning News, said it would eliminate 500 positions, and equipment maker Deere & Co. said 160 employees at its plant near Des Moines, Iowa, will be laid off later this month.