Continuous unemployment claims at 26-year high in the US

The claims for Americans filing for first-time applications for unemployment benefits showed a sharp fall last week, although the unemployment claims reached a 26-year high of 586,000 posted the week ending December 20, according to the new data released today by the US department of labour.

The unemployment benefits claim dropped sharply to 94,000 last week, resulting in the total seasonally adjusted amount of initial claims to 492,000, largest decline in 16 years. The insured unemployment rate reduced to 3.3 per cent last week from earlier 3.4 per cent.

On the other hand the workers who have taken jobless benefits for more than a week increased by 140,000 to 4.5 million, which is the highest number recorded since December 1982.

According to analysts many newly jobless workers could not file their claims for unemployment benefits due to the Christmas vacation, and the seasonal variation during holidays may not have been adjusted in the weekly figures.

According to labour department figures, the unemployment benefit claims were up 45 per cent from the 339,000 new unemployment claims filed for the same period last year.

With a large number of companies reeling under credit crunch have stepped up their pace of sacking workers aftermath of the financial crisis and recession, could further cause the situation to intensify in the future.

The four-week moving average of new jobless claims, which forecasts an idea of long-term unemployment trends dropped to 552,250 last week from 558,000, a decrease of 5,750 from the previous week, according to the Department of Labor.

Thirty-seven states and territories reported an increase in new claims for the week ended December 20, while 16 had a decrease in new claims, according to a Bloomberg report.

The decreases in first time claims in some states for the week could possibly be due unemployed individuals in those states failing to file unemployment claims due to the holiday season.

The labour department announces its monthly payroll report, which records the weekly dismissals of employees indicating a sluggish economy when the number of job losses are high and low job losses in a booming economy. The latest figures for December reflect the state of the job market due to the financial crisis in the US especially in the auto industry and financial sectors.

The unemployment benefit claims can be availed of by people who have lost their full-time jobs reasons outside their control. While those individuals who are actively looking for work and have exhausted their unemployment benefits are accounted as unemployed in the labour depatment records.

President-elect Barack Obama is working on $850-billion, two-year stimulus package to stimulate growth and create 3 million jobs.

The department of labour is scheduled to release its report for the month of December on 9 January 2009.