US weekly jobless claims down 9,000 to 366,000; cont. claims down 5,000 UPDATE

Thu, Mar 27 2008, 13:51 GMT
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WASHINGTON (Thomson Financial) - The number of individuals filing new claims for unemployment insurance and the number of those continuing to receive unemployment insurance fell unexpectedly during the week, while the four-week moving averages for these indices rose to their highest levels in more than two years, the Labor Department said today.

The number of first-time claims filed in the week ending March 22 dropped 9,000 to 366,000. Economists polled by Thomson's IFR Markets were expecting 370,000 new claims.

"While this reflects a meaningful deterioration of the job market, the pace of layoffs is considerably lower than is typical of previous economic slumps," said economists from Nomura Economics Research.

However, the four week moving average for initial claims increased 1,750 to 358,000, the highest level since October, 2005. Economists prefer the four week moving average because it smoothes out fluctuations in weekly data.

For the week ending March 15, the number of individuals continuing to receive unemployment insurance fell by 5,000 to 2.845 mln, well below the 2.870 mln claims economists were expecting.

Meanwhile, the four week moving average for continuing unemployment claims increased 25,250 to 2.824 mln, the highest level since October 2005.

"Through the week-to-week volatility, the trend in jobless claims is higher, as is the trend in continuing claims," said Bear Stearns economists. "Both these series point to a weakening labor market," they added.

The Labor Department today noted that Puerto Rico closed its state offices during the reference week, so it recorded no initial claims during that time.

"The uncertainty over Easter seasonals mean the weekly claims numbers need to be viewed with even more skepticism than usual, but it is clear that the trend is rising and is now approaching the level seen immediately before the start of the recession in 2001," said Ian Shepherdson of High Frequency Economics.

He added that companies outside of the housing sector "have hoarded labor for much longer than usual in this cycle but that strategy is now proving expensive as activity weakens across broader swathes of the economy. Expect the trend in claims to keep rising, but be prepared for even noisier numbers than usual over the next few weeks," Shepherdson said