Jobless Claims Fall But Remain At Elevated Levels

Initial claims for jobless benefits fell by the largest amount in two months last week, but remain above levels consistent with healthy job growth.

WASHINGTON (AP) -- Initial claims for jobless benefits fell by the largest amount in two months last week, but remain above levels consistent with healthy job growth.

Despite the drop of 19,000, claims are at about the same level they were at the beginning of the year. The stubbornly high level of requests for jobless aid is a sign hiring remains weak even as the economy recovers.

The Labor Department said Thursday that new claims dropped to a seasonally adjusted 457,000. That's slightly below economists' forecasts of 460,000, according to Thomson Reuters.

First-time requests for unemployment insurance have been stuck at about 450,000 since the beginning of this year. New claims dropped steadily last year after reaching a peak of 651,000 in March 2009. Claims need to fall closer to 425,000 to signal sustained job growth, many economists say.

The four-week average dipped by 1,500 to 462,750, the first drop in six weeks.

Separately, the Commerce Department said Thursday that orders for big-ticket manufactured goods fell by 1.1 percent last month as demand for commercial aircraft declined. But excluding the volatile transportation sector, orders rose 0.9 percent, suggesting that the manufacturing sector remains a key driver of the economic recovery.

The reports come as worries grow about the health of the economic recovery. New home sales dropped in May to their lowest level on records dating from 1963, the Commerce Department said Wednesday. That followed a report earlier in the week that sales of previously-owned homes also fell last month, as tax credits for homebuyers expired April 30.

The Federal Reserve on Wednesday provided a more cautious outlook as it kept a key interest rate it controls near record lows. The Fed said the economic recovery is "proceeding," a more reserved judgment than in April, when it said economic activity continued to "strengthen." The Fed also said the labor market is "improving gradually."

Claims could be elevated for several reasons. Many economists say laid-off workers are more likely to seek benefits in a weak economy than in a strong one, because they have less hope of finding work. That would keep claims high even if layoffs aren't increasing.

Other analysts note that home construction has fallen sharply in recent months. That could cause higher claims by construction workers.

The total number of people receiving benefits, meanwhile, dropped 45,000 to 4.5 million, the department said. But that doesn't include about 5.3 million people who received extended benefits paid for by the federal government in the week ended June 5, the latest data available.

During the recession, Congress added up to 73 weeks of extra benefits on top of the 26 weeks typically provided by states.

But those extensions expired earlier this month, leaving about 900,000 people without unemployment insurance, according to the Labor Department. That figure is expected to grow to 1.25 million by the end of this week.

The House approved legislation to restore the 73 extra weeks but the Senate is still debating the bill.

In one positive sign, more CEOs of large companies say they plan to increase hiring. A survey by the Business Roundtable, a group of chief executives, found that 39 percent expect to add jobs in the second half of this year. That's the highest percentage planning to add jobs since mid-2007.

One company that's hiring is software maker Adobe Systems Inc. In the three months through May, it added 190 positions as revenue rose 34 percent. The company said Tuesday it plans to keep hiring.