The number of laid off workers filing claims for unemployment benefits fell for a fourth straight week, an encouraging sign that the job market is holding up in the midst of a host of otherwise bad economic news.
The Labor Department reported Thursday that applications for unemployment benefits dropped by 1,000 to 301,000 last week.
It marked the fourth straight weekly improvement and pushed claims down to the lowest level in four months. The string of falling claims numbers was a welcome sign after a big increase in the unemployment rate to 5 percent in December had increased worries about a possible recession.
The decline in jobless claims was unexpected. Analysts had been forecasting that the number of laid off workers applying for benefits would actually rise by 19,000 under a belief that a prolonged slump in housing and a severe credit crunch would prompt businesses to trim their employment roles.
Many private economists said the recent declines in jobless claims reflected the government’s problems in adjusting the data around this time of year for seasonal factors.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, conceded that based on the latest data “claims continue to confound.” But he predicted that the claims numbers will start to rise in coming weeks, providing a truer reflection of the economy’s sharp slowdown.
Rising worries about a possible recession in the United States triggered a global stock market sell-off at the beginning of this week.
However, Wall Street staged a huge rebound on Wednesday as investors became more optimistic following action by the Federal Reserve to cut a key interest rate by a bold three-fourths of a percentage point.
The economy, after racing ahead at an annual rate of 4.9 percent in the July-September quarter, probably slowed to a weak 1 percent rate in the final three months of 2007 and may even fall into negative territory in the current January-March quarter.
A recession is often defined as two consecutive quarters of falling economic output. Many economists believe the risks of a full-blown downturn are roughly 50-50 at present.
The growing worries about the economy in an election year have captured the attention of President Bush and congressional leaders who are working to put together a $150 billion economic stimulus package that will include tax relief for households and businesses in an effort to bolster economic activity.
The drop in applications to 301,000 for the week ending Jan. 19 left total claims at the lowest level since 300,000 were recorded during the week of Sept. 22.
For the week of Jan. 19, 36 states and territories had increases in claims while 17 had declines.
The biggest increase occurred in California, up 27,194, an upsurge blamed on higher layoffs in construction and service industries, and Florida, with an increase in layoffs of 8,496, which was attributed in part to higher layoffs in construction. California and Florida have been particularly hard hit by the housing slump.