Jobless claims drop, suggesting economy slowly adding new jobs

Jobless claims drop, suggesting economy slowly adding new jobs

New jobless claims dropped by 19,000 last week, the largest figure by which they have fallen in two months.

While the falling figures aren’t enough to dramatically change the unemployment rate, they met analyst expectations and show businesses are slowly but surely adding new jobs.

The news comes as the Senate debates a package of tax extenders that would also extend unemployment benefits. The package has been held up by objections, mostly from Republicans, that it is not offset with other spending cuts and would add to the deficit.

Unemployment claims decreased to a seasonally adjusted 457,000 for the week ending June 19, a drop from the previous week’s revised figure of 476,000, according to Labor Department figures released Thursday.

The four-week moving average, which smoothes out the volatility of the weekly number, dropped 1,500, to 462,750.

The number of people who have exhausted their 26 weeks of unemployment benefits and are collecting extended unemployment insurance increased by nearly 45,000, to 5.3 million for the week ending June 5.

These are the people who would be directly affected by an extension of unemployment benefits.

Senate Democrats have trimmed the size of the tax package, which includes the unemployment benefits as well as aid to states, in a bid to lower its costs and make it more palatable to Republicans. But so far those efforts have been fruitless.

Democratic Sen. Ben Nelson (Neb.) has opposed the recent versions of the bill, saying he wants the entire measure paid for with other spending cuts or tax increases. He argues that with the economy now expanding, Congress should pay for all spending, given the nation’s record debt level.

Economists such as Mark Zandi of Moody’, however, have warned that the economy’s health could slide if Washington turns off spending entirely. He and others have called on Washington to balance deficit cuts with spending to support continued economic growth.

Job numbers for June are expected next Friday, when some believe the nation’s unemployment rate could tick up when the Census Bureau begins to lay off temporary workers who are collecting information.

Hiring for this year’s census peaked in May, as the nation added more than 400,000 jobs, many of them the temporary Census hires. That helped lower the nation’s unemployment rate to 9.7 percent.

Washington and Wall Street will be focused on the private-sector figures in June’s report. Private-sector hiring picked up in April before slumping in May.

An average of 125,000 to 150,000 workers were hired in April and May by the private sector. Through the first five months of the year, the economy added 495,000 workers.

Chad Stone, the chief economist with the Center for Budget and Policy Priorities, called those numbers “sluggish” at best and urged Congress to pass the extension of unemployment benefits languishing in the Senate to ensure that unemployed workers still get relief amid a brutal labor market.

“They think they have to pay for it, and it’s crazy,” Stone said. “We have to get the patient off the floor first before they can start exercising.”

Overall, the number of people collecting unemployment benefits of any kind increased by 155,000, to 9.66 million, for the week ending June 5.

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