New jobless claims drop sharply last week

By Vicki Needham - 07/15/10 11:03 AM ET

New claims for unemployment benefits dropped sharply last week, hitting their lowest level since September 2008 as factories stayed open during the summer months.

Claims dipped 29,000 to 429,000 from the previous week’s revised figure of 458,000 for the week ending July 10, according to Labor Department figures released Thursday.

General Motors and other manufacturers haven’t temporarily laid off workers this summer. GM has decided not to take their usual two-week break during the summer to retool their factories.

Separately, wholesale prices fell for a third straight month in June, pushed down by falling energy and food costs, the largest decline in eight years.

Taking out volatile food and energy, core prices were tame and inflation remained relatively flat, according to the Labor Department.

Meanwhile, industrial production rose 0.1 percent in June, the fourth straight month with gains, while manufacturing dropped 0.4 percent after three months of bolstering the nation’s economic recovery, according to the Federal Reserve.

Claims dropped for the second straight week and for the third time in the past month. Unemployment numbers have hovered around 450,000 for the past several months, showing no real downward movement, which is needed to push along the recovery.

If job numbers continue to fall for the next several weeks, economists might be become more upbeat about the job market.

Economists argue jobless claims need to drop into the low 400,000s or high 300,000s to reflect stronger job growth in the private sector.

The Senate is expected to pass a $34 billion bill early next week that will provide for an extension of unemployment benefits through November. The bill has stalled out in the upper chamber behind a Republican filibuster. Senate Republicans have argued the bill should be paid for and not add to the deficit.

Since extended unemployment insurance expired June 2, almost 2.5 million people have lost their benefits beyond the initial 26 weeks provided by states.