New Jobless claims drop while existing claimers continue

In what is being seen as an unprecedented trend, new unemployment benefits claims have experienced a drop in the last week. The number of people that are continuously seeking aid however continues to increase sharply and consistently.

The Labor Department reported that applications for unemployment insurance experienced a drop by 24000 and adjusted to a seasonal 467000 for the week that ended on the third of January. Wall Street had however expected that the initial claims would increase to 54000. The actual figures that have been recorded are a reflection of the unexpected post Christmas season trends.

The average of initial claims for the past for weeks fell by 27,000 to 525,750. But the number of people that are continuing with their jobless benefits rose by 101,000 to 4.61 million. This number was far more than what the analysts had expected at 4.5 million. Indeed it has been the highest level recorded since November 1982.

Professor Peter Sperling of Touro College told CBS Radio New “The recession is not at its worst point yet – it will probably hit bottom sometime around the middle of 2009. The unemployment rate is going to go up.”

The statistics of the high level of people that are continuing seeking unemployment benefits is an indication of the fact that people who have lost their jobs are finding it extremely difficult to find new jobs.

Last week’s decline has been the second consecutive design to have recorded below 500000. The past seven weeks have been recorded above this level.

Economists believe that the improvement is only temporary. Three states claimed that their online and phone filing systems have crashed completely due to the heavy load of first time filers. The impact of the volume of people that have been filing for the first time will only come to light in next week’s data.

Many major companies have resumed mass layoffs after making a comeback from the holidays. The insurance provider giant Cigna C, data storage company EMC Corp, aluminum producers Alcoa Inc and computer products makers Logitech have all announced large scale job cuts in the near future.

Talking to the news, Sperling said  “Instead of trying to cut salaries and wages, which can be very demoralizing, very difficult [and] hard to reverse, most companies, when they face these economic problems, tend to lay people off.”