Nation's jobless claims fall less than expected

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By Tiffany Griffin

Story Created: Sep 11, 2008 at 8:02 AM EST

Story Updated: Sep 11, 2008 at 8:13 AM EST

WASHINGTON (AP) — New applications for unemployment benefits fell less than expected last week, the U.S. government said Thursday, as the struggling economy continues to take a toll on workers.

The Labor Department reported that applications for jobless benefits dropped to a seasonally adjusted 445,000, down by 6,000 from the prior week. That is above analysts' expectations of 440,000.

The four-week moving average, which smooths out week-to-week fluctuations, rose slightly to 440,000.
Economists consider claims above 400,000 an indicator of a slowing economy. A year ago, initial claims stood at 322,000.

The number of people continuing to draw jobless benefits also increased, rising 122,000 to 3.53 million, above analysts' expectations and the highest in almost five years. The four-week average rose to 3.43 million.

The economy has been hobbled by the housing and financial crises, which caused U.S. gross domestic product to contract late last year. While growth got a boost this spring from a jump in exports and tax rebate checks from the government, many economists predict the United States could slip into recession later this year.

The figures come after the Labor Department reported last week that the unemployment rate rose to 6.1 percent in August, the highest in five years.

Employers cut payrolls by 84,000, the department said last week, the eighth straight month of cuts. So far, 605,000 jobs have been eliminated this year. Some economists estimate that figure could grow to 1 million by year-end.

Increased unemployment can hinder consumer spending as laid off workers and those who fear for their jobs cut back on their purchases. That can further weaken the economy.

GMAC Financial Services said last week that it will lay off 5,000 workers as part of a plan to scale back its mortgage lending. GMAC is majority owned by private equity firm Cerberus Capital Management LP while General Motors Corp. holds a large stake.

The New York Times Co. and tobacco producer Reynolds American Inc. also announced layoffs earlier this week.

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