Published January 9, 2009

Unexpected fall in new US jobless claims

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(WASHINGTON) The number of US workers filing new claims for unemployment benefits fell unexpectedly by 24,000 last week, government data showed yesterday, but the number of people remaining on jobless rolls rose to a fresh 26-year high.

Analysts reckoned the decline was likely caused by people putting off filing their applications because of the holidays.

'It covers a holiday period, so people were delaying filing their claims. There is going to be a surge next week,' said David Watt, a senior currency strategist at RBC Capital Markets, in Toronto.

'So I don't think this is indicative of the trend, and if anything, I'm surprised the consensus call was so high.'

Initial claims for state unemployment insurance benefits fell to a seasonally adjusted 467,000 in the week ended Jan 3 from a slightly downwardly revised 491,000 the prior week, the Labor Department said.

It was the lowest reading for initial claims since the week ending Oct 11 last year, when the figure was at 463,000.

Analysts are saying that the job situation is likely to worsen with the US probably suffering a net loss of 2.4 million jobs last year. They predict that the pain is likely to stretch well into 2009 and possibly beyond.

Already the New Year has gotten off to a rough start, and more bad news is expected when the government releases data on December unemployment today.

Just days into 2009, data storage company EMC Corp, managed care provider Cigna Corp, aluminium producer Alcoa Inc and computer products designer Logitech International were among those announcing big layoffs as companies scramble to cut costs even deeper. The flurry of layoffs suggest the employment picture will remain grim this year.

'There is absolutely no reason to believe the economy is going to be creating jobs any time soon. There are just no reasons for companies to flick on the hiring switch,' said Richard Yamarone, economist at Argus Research.

On Wall Street, investors worried about the jobs outlook contributed to a sharp decline in stocks. The Dow Jones Industrials lost 245 points to 8,769.70 on Wednesday. -- Reuters, AP