U.S. Jobless Claims Average Reach Highest Level Since April 2002

August 14, 2008 10:25 a.m. EST

Washington, D.C. (AHN) - The number of individuals filing initial jobless claims for unemployment benefits dropped less-than-expected, a report said on Thursday.

U.S. weekly initial jobless insurance claims declined for the first time by 10,000 to 450,000 on a seasonally adjusted basis in the week ending August 9, according to the Labor Department. While, the four-week average, which is a less volatile measure, of initial jobless claims increased by 19,500 to 440,500 in the second week of August, which is the highest since April 2002.

The four-week moving average was between 300,000 and 325,000 for much of 2007, which is a sign of healthy job growth, while it was below 350,000 for most of the first quarter this year. Any figure above 350,000 indicates that the labor market is still weak; the weekly jobless claims have remained at above that level since April.

The number of continuing jobless claims surged by 114,000 to 3.42 million for the week ending Aug. 2, which is the most since November 2003, compared to 3.3 million the prior week.

The four-week average of continuing unemployment claims also moved up 75,250 to 3.27 million, which is the highest since December 2003.

Initial claims surged 40 percent, compared to the same period last year. The report also showed continuing claims have increased to around 32 percent.

Continuing claims have never risen more than 20 percent without pushing the economy into recession. Some economists maintain the country has not experienced a recession due to improvement in other key economic indicators.

Market analysts surveyed by Bloomberg had projected claims would fall to 435,000, according to the median of 41 projections with estimating ranging from 400,000 to 465,000. In July, the unemployment rate jumped to 5.7 percent, up from 5.5 in June, 5 percent in May and April, led by the declining jobs in manufacturing, construction, retail and temporary assistance.

The Labor Department report showed the unemployment rate for workers with unemployment insurance, which tends to track the U.S. jobless rate, moved up to 2.6 percent, from 2.5 percent last week and 2.3 percent early July.

The report also said there were 35 states and territories registering an increase in initial jobless claims, while 18 states reported a decrease in the jobless claims for the Aug. 2 week. This data is reported with a one-week delay.

In the first-half of 2008, payrolls have declined at an average loss of 369,600 workers, compared to 321,600 average weekly claims.

During the 2001 recession, an average of 415,000 jobless individuals per week filed new applications for jobless benefits and insurance.

The U.S. economy has lost jobs in every month since the beginning of this year and it shed as much as 51,000 in July, 62,000 in June and up to 49,000 jobs in May. Last year, the economy created an average of 91,000 new jobs each month.

The consistent increase in the first-time jobless claims reflects a weakening U.S. economy, which has already suffered from the subprime contagion, a higher inflation rate and weak consumer confidence.