Weekly jobless claims drop, but not enough to lower unemployment

First-time claims decreased by 31,000 to a seasonally adjusted 473,000 for the week that ended Aug. 22, the Labor Department said Thursday.

However, the four-week moving average, which smoothes out the volatility of the weekly number and provides a better gauge of the employment situation, increased by 3,250 to 486,750, the highest level since Nov. 28, 2009.

Although claims are well below their high of 651,000 in March 2009, they still aren't low enough to signal strong improvement in the job market. Claims had been gradually declining but have been increasing in recent months.

New claims for the previous week, ending Aug. 14, were revised upward to 504,000 from 500,000.

The news did little to bolster confidence in the economy. The Dow Jones Industrial Average rose at the beginning of Thursday, but was down by a small margin at mid-day. Data showing a worsening housing crisis and slow economic growth have made markets jittery. 

Federal Reserve Chairman Ben Bernanke will give a highly-anticipated address on Friday when he opens a meeting of central bankers hosted by the Federal Reserve in Jackson Hole, Wyo. Economists will be looking for Bernanke's thoughts on the weakness of the recovery, and for any signs of action by the Fed.

The largest decrease in unemployment claims was in California, with a drop of 5,275 because of fewer layoffs in the service and manufacturing industries.

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.

In other data from Thursday's report, the number of people receiving unemployment insurance dropped by 62,000 to 4.46 million in the week ending Aug. 14, from 4.52 million the prior week. 

Those receiving extended benefits — up to 99 weeks in some states — increased by about 302,000 to 5.84 million in the week that ended Aug 7.